The man behind Japan's $170bn bid to prop up the yen

Masato Kanda played a crucial role in Japan's financial landscape as the former vice minister of finance for international affairs. His responsibilities were significant, especially in managing the value of the yen, Japan's currency. For several years, Kanda faced a grueling schedule, often getting very little sleep. He humorously remarked to the BBC that he averaged about three hours of sleep a night, which he considered an exaggeration. His demanding role required him to be constantly alert and engaged, as he was tasked with protecting the yen from market speculators who could potentially disrupt Japan's economy. A weak yen can benefit exporters like Toyota and Sony by making their products cheaper for international buyers. However, during Kanda's tenure, the yen's decline also led to increased costs for essential imports such as food and fuel, creating a cost of living crisis in Japan. Over the three years he served, the yen lost more than 45% of its value against the US dollar. To combat this decline, Kanda authorized an impressive 25 trillion yen, equivalent to approximately 173 billion dollars, to stabilize the currency. This intervention marked Japan's first significant action in the currency market in nearly 25 years. According to economist Jesper Koll, the Bank of Japan and the Ministry of Finance intervene not at a specific currency level but rather when market volatility becomes excessive. Japan has now found itself on the US Treasury's watchlist for potential currency manipulation. However, Kanda defends his actions, stating that they were not intended to manipulate the market. He believes that markets should operate based on fundamental economic principles, but they can sometimes fluctuate wildly due to speculation. When these fluctuations impact everyday consumers, particularly in their ability to purchase food and fuel, that is when intervention becomes necessary. Unlike countries such as the US and UK, which can raise interest rates to strengthen their currencies, Japan has struggled to do so due to its weak economy. Professor Seijiro Takeshita from the University of Shizuoka argues that Japan had no alternative but to intervene in the currency markets. He acknowledges that while it may not be the ideal solution, it was the only viable option available. Interestingly, the yen's value has recently increased without any intervention from Kanda or his successor, leading to questions about whether the 170 billion dollar effort to support the yen was ultimately effective. Kanda asserts that it was not a waste of money, noting that their interventions actually yielded a profit, although he emphasizes that profit was never the primary goal. When asked about the success of his actions, he states, 'It is not up to me to evaluate, but many say our exchange management stopped the excessive level of speculation. ' He believes that the final judgment should come from markets or historians. After years of economic stagnation, Kanda expresses optimism about Japan's future. He notes, 'We are finally seeing investments and wages rising, and we have a chance to go back to a normal market economy. ' In a surprising twist, Kanda has also gained popularity on social media, where users have celebrated his unexpected ability to influence financial markets through a series of AI-generated dancing videos.