The Japanese government has been at pains to tackle the yen’s rise, which is contributing to the country’s economic slowdown. [CTM: Is 15 years of zero nominal growth a “slowdown”? More like parking the economy in Norma Desmond’s garage.] However, Japan has few options since the US and other key countries are disinclined to support its efforts to weaken the yen, making it unlikely that intervention in the foreign exchange market would work.
It’s funny how every tinpot developing country can figure out how to hyperinflate and drive the external values of their currencies to a billionth of a cent (as indeed did Germany in 1923), but somehow the poor BoJ has “no tools” to influence either inflation or the external value of the yen.
As Bernanke painstakingly explained to them in 2002 (eight years ago!), all the BoJ has to do is buy things, anything: JGBs, Treasuries, gold, whatever, until they achive their targeted price. As I have repeatedly pointed out, they did this quite successfully for for 20 years under Bretton Woods.
But that would be “unorthodox” and would cause the BoJ to “lose credibility”, as if it has an iota of credibility left after failing to meet its policy objectives for 15 years.