Former chief forex strategist at Goldman Sachs: Japan's debt woes could lead to any forex intervention being in vain

Robin Brooks, former chief forex strategist at Goldman Sachs Group, believes that Japan’s huge government debt – at least for now – could wipe out any efforts to support the yen. According to the International Coin Fund (IMF), the debt has ballooned to more than 250% of the size of Japan’s economy. And that gives the Central Bank a strong incentive to keep Intrerest rates low to drive down government costs, he said. The result: unless policy changes, any efforts to push up the yen’s Exchange Rate will be in vain. “It’s really about debt — too long debt, forcing Japan into a dilemma, keeping the Intrerest Rate low while transmitting fiscal pressure to the yen,” said Brooks, who is now a fellow at the Brookings Institution. "Even if you’re in long debt, you can use Central Bank to keep your Intrerest Rate low. Japan has been doing this, and Europe has been doing it, but the consequences are there. ”