Former Forex Official: Recent Yen Intervention “Reminiscent of the Asian Financial Crisis,” But Lacks G7 Endorsement and Central Bank Coordination

(1) Former top Japanese foreign exchange official Naoyuki Shinohara stated that the recent US-Japan joint intervention in the yen brings to mind the 1997-1998 Asian financial crisis—when the US, Japan, and the IMF provided US dollars to Thailand to bolster its foreign exchange reserves, with a similar operational approach. However, he emphasized that "today’s Japan is far from being in the same situation as Thailand was back then," although "there are some unsettling similarities in the dynamics at play."(2) Unlike this intervention, the traditional form of coordinated intervention is usually based on a shared judgment among major economies regarding exchange rate trends, and is supported by a Group of Seven (G7) statement. He pointed out that "there is no sign that this process occurred this time. Usually, there would be a joint statement from G7 at some stage, but we have yet to see one."(3) Another notable difference is that central banks were scarcely involved in this operation, whereas in typical cases, central banks act in coordination with finance departments. This reflects a significant difference between this intervention and the traditional approach, both in terms of decision-making mechanisms and coordination frameworks.