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Yen Opportunity Gained and Lost (1993–2000)

In: The Yo-Yo Yen

Author

Listed:
  • Brendan Brown

Abstract

By summer 1993, the Japanese economy had proceeded far down the wrong road since its asset market bubbles had burst. Overly tight monetary policies, wrong currency signals from the policy control tower (especially the Bank of Japan Governor) and a new profligacy in public expenditure had all played a role in the misdirection of the economy. True, the Bank of Japan had at last brought interest rates down to a historic lowpoint (official discount rate (ODR) at 2.5 per cent) in early 1993, and in the autumn (1993) was to reduce rates further (ODR down to 1.75 per cent), but that was far short of the aggressive ease required (ODR at 0.25 per cent coupled with massive open market operations designed to step up the pace of monetary expansion) to reverse the errors of the previous two years. And the yen was at a stiflingly high level (except as perceived by those policymakers in Tokyo or Washington who assessed equilibrium exchange rates in terms of their consistency with the single aim of extinguishing the Japanese trade surplus).

Suggested Citation

  • Brendan Brown, 2002. "Yen Opportunity Gained and Lost (1993–2000)," Palgrave Macmillan Books, in: The Yo-Yo Yen, chapter 5, pages 163-214, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-4039-0710-3_6
    DOI: 10.1057/9781403907103_6
    as

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