Former US Treasury Secretary Lawrence Summers said currency interventions are not effective in shifting exchange rates, even on the large scale that Japan is said to have recently deployed.
“Given the sheer size of the capital markets, I think there’s pretty clear evidence that intervention doesn’t work — even on the scale that the Japanese targeted,” Summers said on Bloomberg Television’s Wall Street Week with David Westin. “It’s just overwhelmed by the breadth of private sector capital flows.”
The yen is heading for its best week against the dollar since 2022, after possibly two rounds of intervention by Japanese authorities. Policymakers likely spent about 9 trillion yen this week, or nearly $60 billion at current exchange rates, according to a Bloomberg analysis of the Bank of Japan’s accounts. That’s after the yen fell to its weakest level since 1990 on Monday.
