It took months of clamoring by the country's exporters. But Japan's Finance Ministry finally took action to rein in the yen's yearlong surge in value against the dollar.
On Tuesday the yen jumped to fresh 15-year highs against the greenback on speculation that re-elected Prime Minister Naoto Kan didn't have the spine to slow the currency's climb.
But by the next morning the government was confirming what many had hoped for: It had intervened in foreign exchange markets to sell the yen and push it down against dollar.
After trading at 82.87 yen on Tuesday, the dollar suddenly soared to 85 yen by Wednesday afternoon. Investors approved; Tokyo's Nikkei stock index jumped 2.3 percent.
Honda released a statement saying: “From the standpoint of aiding the competitiveness of Japan's manufacturing industry, we applaud the move by the government and the Bank of Japan to correct the yen's strength.”
Automakers, particularly small, export-dependent ones like Mazda and Suzuki, want the government to do something – anything -- to undercut the yen's meteoric appreciation. But even big names like Toyota, Honda and Nissan are feeling the hit big time.
Toyota bases this year's earnings forecast on an exchange rate of 90 yen to the dollar.
For Japanese carmakers, the higher yen slashes the value of profits earned overseas and pressures them to raise sticker prices, which makes their products less competitive.
For now, Japan's intervention has stemmed the tide. The only question is for how long.
The United States and Europe are happy to see their industries benefit from a favorable exchange rate. Without the coordinated intervention of both the U.S. Federal Reserve and the European Central Bank, a unilateral Japanese intervention could be ephemeral at best.
And with the government signaling tolerance for an 82-yen ceiling before stepping in, some analysts are saying it's only a matter of time before speculators return to pump up the yen again.