Reply #14: Failure of Biggest Intervention in Seven Years Pressures BOJ: Japan Credit [View All]

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http://www.bloomberg.com/news/2011-09-02/failure-of-biggest-intervention-in-seven-years-pressures-boj-japan-credit.html

The yen’s third monthly gain against the dollar means the Bank of Japan may decide next week to boost injections of funds into the financial system, as policy members seek ways to stem the currency’s strength and spur growth.

The BOJ has eased policy at least five times since December 2009, all following yen advances in the prior month. The yen posted a 0.1 percent gain versus the greenback last month and reached a post-World War II record of 75.95 per dollar on Aug. 19 even as Japan conducted its biggest currency-market intervention in seven years. The BOJ’s key interest rate is the lowest in the world at a range of zero and 0.1 percent, and hasn’t been above 0.5 percent since 1995.

A report this week showing a slowdown in Japanese factory output was the latest sign that the yen’s strength is impeding economic recovery from three quarters of contraction. Net exports, or shipments less imports, in the second quarter were the biggest drag on gross domestic product since 2009. The Bank of Japan will hold a two-day policy meeting on Sept. 6, ahead of a Federal Reserve gathering that starts Sept. 20.