As the Great Unwind continues with the carry trade, Japan is sensing an economic bonking of almighty proportions by the appreciating yen - crushed exports, spectre of deflation etc etc. So they put in the bat call to friends in the G7 and painfully extracted this excerpt via an unscheduled Sunday statement:

“We are concerned about the recent excessive volatility in [Japan’s] exchange rate and its possible adverse implications for economic and financial stability…We will continue to monitor markets closely and co-operate as appropriate.”

Just to make sure everyone got the message – communiqué speak can be tricky - Christine Lagarde, the French finance minister clarified yesterday:

“We wished to support this possible intervention of the Japanese authorities, knowing it would be about a purely Japanese intervention.”

One analyst, Mr Mellor, quoted in the Bloomberg link above implies this is a step towards G7 activism at some future point. However, talk is cheap and it sounded alot more like 'We’re right behind you (all the way back here, in fact)'. The study quoted further down in the article (direct link to the paper here) lends academic credence to this obvious point.

Somewhat separately, and very unfairly for the admirable Madame Lagarde, her quote unfortunately recalls another high flying (but otherwise entirely dissimilar) female French politician who produced an incredible series of gaffes in her brief tenure as Prime Minister including, to her discredit, attribution of the following characterisation of Japan:

  • a “nation of ants" and "yellow dwarfs" who "sit up all night thinking of ways to screw us" (link).

Realpolitik comes in many flavours with the result, apparently, that the coordination seen on 9 October by the sparkly new virtual global central bank only comes into play when the pain is equitably distributed (which may, with the attendant G7 coordination, come along presently). Another Edith demonstrates:

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