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▼ Japan's Forex Intervention Hits Record ¥2.84 Tril To Stem Yen Fall
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Japan's currency intervention last week cost 2.84 trillion yen, the largest-ever amount spent to stem the yen's sharp slide against the U.S. dollar, Finance Ministry data showed Friday.
The yen-buying, dollar-selling operation, Japan's first since 1998, was carried out on Sept. 22, shortly after the Japanese currency plunged past the psychologically important 145 mark amid prospects that the monetary policies of Japan and the United States would further diverge.
Friday's data covers the period between Aug 30 and Sept 28, and no daily breakdown was disclosed. Previously, 2.62 trillion yen spent on April 10, 1998, was the largest on record.
Finance Minister Shunichi Suzuki has said the rare intervention was aimed at "correcting" speculative moves in the currency market, warning that Japan will take further steps if needed as currency movements should be stable, not "rapid and one-sided."
Japan had around $1.29 trillion in foreign currency reserves, which include securities and deposits at the end of August. Of the total, about $136 billion in deposits was seen as ready for immediate use in carrying out the intervention.
The intervention sent the dollar sharply lower by around 5 yen into the 140 yen zone. But it has rebounded since then and was trading below the 145 yen line on Friday.
Despite the initial impact on the currency market, analysts say such direct intervention, especially if it is carried out by Japan alone without the United States or Europe, cannot reverse the trend of yen weakness.
The yen's rapid-paced depreciation against the dollar has raised a sense of alarm among Japanese authorities, and Bank of Japan Governor Haruhiko Kuroda has said volatile yen movements are negative for the economy.
A weak yen inflates import costs of energy, food and other raw materials for resource-poor Japan.
BOJ's dovish monetary policy stance is a major factor driving the yen to its lowest level in 24 years against the dollar as the U.S. Federal Reserve has already entered a rate-hike cycle, with more increases expected to tame soaring inflation.
© KYODO
The yen-buying, dollar-selling operation, Japan's first since 1998, was carried out on Sept. 22, shortly after the Japanese currency plunged past the psychologically important 145 mark amid prospects that the monetary policies of Japan and the United States would further diverge.
Friday's data covers the period between Aug 30 and Sept 28, and no daily breakdown was disclosed. Previously, 2.62 trillion yen spent on April 10, 1998, was the largest on record.
Finance Minister Shunichi Suzuki has said the rare intervention was aimed at "correcting" speculative moves in the currency market, warning that Japan will take further steps if needed as currency movements should be stable, not "rapid and one-sided."
Japan had around $1.29 trillion in foreign currency reserves, which include securities and deposits at the end of August. Of the total, about $136 billion in deposits was seen as ready for immediate use in carrying out the intervention.
The intervention sent the dollar sharply lower by around 5 yen into the 140 yen zone. But it has rebounded since then and was trading below the 145 yen line on Friday.
Despite the initial impact on the currency market, analysts say such direct intervention, especially if it is carried out by Japan alone without the United States or Europe, cannot reverse the trend of yen weakness.
The yen's rapid-paced depreciation against the dollar has raised a sense of alarm among Japanese authorities, and Bank of Japan Governor Haruhiko Kuroda has said volatile yen movements are negative for the economy.
A weak yen inflates import costs of energy, food and other raw materials for resource-poor Japan.
BOJ's dovish monetary policy stance is a major factor driving the yen to its lowest level in 24 years against the dollar as the U.S. Federal Reserve has already entered a rate-hike cycle, with more increases expected to tame soaring inflation.
© KYODO
- October 2, 2022
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