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Japan Spent Record $62 Billion in Failed Effort to Prop Up Yen

Japanese authorities have not been able to make a sustained difference to the yen and are unlikely to keep the currency from hovering near crucial lows

Banknotes of Japanese yen are seen in this illustration picture taken September 22, 2022. Photo: Reuters
Banknotes of Japanese yen are seen in this illustration picture. Photo: Reuters


Japan’s authorities spent a record 9.79 trillion yen ($62.23 billion) to support the country’s falling currency over the past month, an effort that is unlikely to keep the currency from hovering near crucial lows.

The amount, spent between April 26 and May 29, outweighed Japan’s last such big intervention in the foreign exchange market — worth an estimated 9.1 trillion yen over three days between September and October 2022.

“This was larger than expected, underscoring Japan’s resolve to ease the pain of imported inflation,” said Daisaku Ueno, chief FX strategist at Mitsubishi UFJ Morgan Stanley Securities.


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“Authorities will likely continue to spend big on intervention.”

The data, released by Japan’s Ministry of Finance on Friday, confirmed the suspicions of traders and analysts that Tokyo entered the market in two rounds of massive dollar-selling intervention shortly after the yen hit a 34-year low of 160.245 per dollar on April 29, and again in the early hours of May 2 in Tokyo.

Friday’s monthly data set only shows the total amount Tokyo spent on currency intervention during the period. A more detailed daily breakdown of intervention will only be seen in data for the April-June quarter, likely to be released in early August.


Rate cut uncertainty

Despite spending those billions of dollars of foreign reserves, Japanese authorities have not been able to make a sustained difference to the yen.

Much of the yen’s woes are down to the resilience of the US economy and the resulting delay in Federal Reserve rate cuts. Meanwhile, the Bank of Japan (BOJ) is expected to take its time in raising interest rates this year.

Market watchers are now looking at whether and how soon Japan might step into the market again.

The yen is still languishing near the 160 threshold that is widely seen as authorities’ line in the sand for intervention.

The currency was trading at 157.26 per dollar as of close on Friday after Finance Minister Shunichi Suzuki issued a fresh intervention warning earlier in the day.


More intervention expected

Japanese authorities have refrained from commenting on whether they forayed into the market. But top officials have consistently warned they are watching currency markets closely and stand ready to take all necessary measures to counter excessive volatility.

Top currency diplomat Masato Kanda said last week that authorities are prepared to take action at “any time” to counter excessive yen moves.

Kanda, now the vice finance minister for international affairs, led the massive yen-buying operations in September and October of 2022.

Although Japan has had only limited success in arresting sharp yen swings, there’s a good chance it could act again even if the currency does not break beyond the 160-to-the-dollar mark, said Masafumi Yamamoto, chief FX strategist at Mizuho Securities.

“If the yen makes sharp single-day moves from the current level to say, 158 yen or beyond, it might take action again.”


  • Reuters, with additional editing by Vishakha Saxena


Also read:

Inflation Indicators in Japan Drop Below 2% in April

Japan’s Kishida Pledges Reforms to Woo Foreign Investors

Bank of Japan ‘Spent $59 Billion Lifting Yen’ 3.5%

Japan Will Prop Up Yen Until Freefall Risk Fades: Ex-BoJ Chief

Bank of Japan Ends Negative Rates, as Ueda Normalises Policy

Yen, Inflation Stresses ‘Could Force BoJ to Tighten This Year’

China’s Yuan Leapfrogs Yen in Global Payments Rankings – FT


Vishakha Saxena

Vishakha Saxena is the Multimedia and Social Media Editor at Asia Financial. She has worked as a digital journalist since 2013, and is an experienced writer and multimedia producer. As a trader and investor, she is keenly interested in new economy, emerging markets and the intersections of finance and society. You can write to her at [email protected]


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