The Man Behind Japan's $170 Billion Yen Support Strategy

 For several years, Masato Kanda had a grueling schedule, often joking, “Three hours a night is an exaggeration.” Speaking to the BBC from Tokyo, the former vice finance minister for international affairs recounted his relentless routine, balancing crucial responsibilities that made sleep elusive.

As Japan's top currency diplomat, Kanda faced the challenge of countering currency market speculators, particularly during his tenure when the yen's value plummeted, leading to a cost of living crisis. Historically, Japan's authorities have intervened to weaken the yen to benefit exporters like Toyota and Sony, but this time, the weakening yen raised the costs of essential imports, including food and fuel.

Over his three years in the role, the yen depreciated by more than 45% against the U.S. dollar. To combat this decline, Kanda deployed an estimated 25 trillion yen (around $173 billion) to stabilize the currency—Japan's first intervention of this scale in nearly 25 years.

Masato Kanda played a key role in one of Japan's largest currency interventions in history.

Economist Jesper Koll explained that Japan’s interventions are not aimed at a specific currency level but are responses to excessive market volatility. Kanda insisted that the actions taken were not manipulative but necessary. “When ordinary consumers are affected by excessive fluctuations, that is when we intervened,” he said.

Unlike countries such as the U.S. and U.K., which can increase interest rates to strengthen their currencies, Japan struggled to raise borrowing costs due to its economic challenges. Professor Seijiro Takeshita from the University of Shizuoka noted that Japan had little choice but to intervene.

Interestingly, the yen's value began to rise recently without direct action from Kanda or his successor, following an unexpected interest rate hike from the Bank of Japan and the appointment of a new prime minister.

When asked if the $170 billion effort was wasted, Kanda argued against that notion, asserting that the interventions even turned a profit, though that was never the primary goal. He believes his strategies helped curb excessive speculation.

As for Japan's economic future, Kanda expressed cautious optimism, noting signs of rising investments and wages. “We have a chance to return to a normal market economy,” he stated.

In an unexpected twist, Kanda has become an internet sensation in Japan, celebrated for his ability to influence financial markets, thanks to a series of AI-generated dancing videos that captivated social media users.