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Main » 2016 » June » 3 » The Fed - the master of currency manipulation. Like other Central Bank
The Fed - the master of currency manipulation. Like other Central Bank



States have always tried to make imports cheaper. America even helping to devalue the yen, partly financing its fall - based on AMarkets.




A bit of history. September and October 2003, the Bank of Japan sold 2.7 trillion yen to reduce the value of its currency. Japanese Finance Minister confirmed that most of the currency was bought by the US Fed. Periodically, America came to the conclusion that the dollar is too strong and it is urgently necessary to push down. In such cases, the Fed has traditionally sells dollars at the international FX-market. Interestingly, in such cases, part of the largest buyer of dollars the Bank of Japan. For example, in 1997-1998. the purchasing power of the dollar against the yen has grown considerably - by almost 15%. To combat the breakthrough growth, the Fed bought Yen for $ 800 million. The graph shows that from December 1997 to June 1998, Japan was not the only economies that artificially lower its currency. The country at this moment, on the contrary, strengthened the yen by selling tens of billions of dollars to help America devalvirvat dollar.


However, the favorite tool for the manipulation of the currency value is realized through its impact on the monetary base. From November 2008 (the beginning of QE1) to June 2011 (end of QE2) monetary aggregate M2 for the US economy grew by more than $ 1 trillion.

The increase in the monetary base affected the rate of the dollar-yen spot - it fell from 96.89 to 80.49 during the given time period. And the decline in spot rates for American-Japan, in turn, has led to an intensification of the export of goods from America to Japan:

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