17 Pages Posted: 26 Oct 2012
Date Written: October 1, 2012
This paper shows that the Japanese foreign exchange interventions in 2003/04 seem to have lowered long-term interest rates in a wide range of countries, including Japan. It seems that this decline was triggered by the investment of the intervention proceeds in US bonds and that a global portfolio balance effect spread the resulting decline in US yields to other bond markets, thus easing global monetary conditions.
Keywords: Intervention, portfolio balance effect, Japan
JEL Classification: E5, G12, O24
Suggested Citation: Suggested Citation
Gerlach-Kristen, Petra and McCauley, Robert N. and Ueda, Kazuo, Currency Intervention and the Global Portfolio Balance Effect: Japanese Lessons (October 1, 2012). BIS Working Paper No. 389. Available at SSRN: https://ssrn.com/abstract=2155645