Japan Likely Spent ¥5 Trillion in Forex Intervention

Jiji Press

16:45 JST, May 1, 2024

Tokyo, April 30 (Jiji Press) — Japanese authorities are believed to have conducted yen-buying$,-selling foreign exchange market intervention worth some ¥5 trillion Monday, it was learned Tuesday.

The estimate was given by market players based on Bank of Japan data on projected changes in commercial financial institutions’ current account balances at the bank.

On Monday, the dollar slumped below ¥155 just hours after exceeding ¥160 for the first time in about 34 years. This happened in overseas trading as the Tokyo market was closed for a national holiday.

The abrupt moves fueled speculation that the Japanese authorities stepped in to buy yen and sell dollars on multiple occasions. The government has declined to say whether any such intervention was conducted.

The biggest amount Japan has spent on yen-buying intervention on a single day is ¥5,620.2 billion used on Oct. 21, 2022, when the dollar was rising close to ¥152 .

Current account balances at the BOJ change in line with the movements of funds deposited by private financial institutions with the central bank. On Tuesday night, the BOJ released projections of changes in the current account balances for Wednesday.

According to the data, treasury and other funds, which reflect the movements of funds used in market intervention if such action is taken, is forecast to log a shortage of ¥7.56 trillion .

When yen-buying intervention is carried out, the government sucks yen funds from financial institutions, pushing down the balance of treasury and other funds.

The projected shortfall is about ¥5.5 trillion larger than some ¥2 trillion that the market had expected.

The yen’s fall accelerated after the BOJ kept its monetary policy intact Friday. Market players concluded that BOJ Governor Kazuo Ueda did not show strong concerns about the recent yen drop at a press conference after the decision.

The dollar was trading below ¥156 before the BOJ’s decision was announced.