Bank of Japan intervenes for the first time in 24 years to shore up the collapsing YEN. The rally was token with the YEN still at two decade lows.

Chart 1

Chart 2

The Bank of Japan, after 24 years has bought it's own currency on the 22nd September to shore up the YEN, a futile and token gesture to which as an economy, is obsessed with loosest monetary polices of any country on the planet.   With a negative interest rate at -0.1% and as a net importer of oil and gas, the era of cheap money has come to a crushing end, Japan may feel its 1970's inflation swing back with a vengeance.  The Federal Reserve which has guided the global tardiness of increasing rates, while now at the forefront, is faced with a challenge that is no less daunting that they must reverse three decades of loose monetary polices themselves.  The economic experiment of going beyond funding and underwriting assets namely bonds, Central Bank's and the Fed, which sits on 8 Trillion in assets, will begin write-downing its balance sheets, as rates begin to ascend.  The Swiss National Bank just took a hit and so did the Reserve Bank of Australia, which needed a cash injection from the Australian government in 2013 on FX losses.   Bank of Japan is sitting on 7 Trillion (U.S.).  Underwinding these massive balance sheets will be that great unknown, particularly when the inflation fight has just begun with the U.S. interest rates at 3.50%, Japan will offload its currency for U.S. Dollars and if en masse Japanese households begin  transfer to U.S. Dollars.   The YEN will sell further. 

Chart 1.  6mths of YEN selling

Chart 2.  Two decades of YEN moves of the 'safe haven' it once was.