Gerlach-Kristen, Petra McCauley, Robert N. Ueda, Kazuo
Year of Publication:
Working Paper, The Economic and Social Research Institute (ESRI), Dublin 442
This paper shows that the Japanese foreign exchange interventions in 2003/04 seem to have lowered long-term interest rates in a wide range of countries, including Japan. It seems that this decline was triggered by the investment of the intervention proceeds in US bonds and that a global portfolio balance effect spread the resulting decline in US yields to other bond markets, thus easing global monetary conditions.