Japan likely spent around 900 billion yen for Oct 24 suspected FX intervention

JAPAN likely spent up to 900 billion yen (US$6 billion) on its second straight day of suspected currency intervention on Monday, bringing the total for yen-buying action since last month to as much as 9.2 trillion yen, according to market estimates on Tuesday (Oct 25).

Authorities' so-called stealth intervention in rapid succession has underscored their resolve in fighting what they have characterised as "intolerable and speculative" yen-selling, although the impact has proved short-lived.

Japan has the world's second-largest foreign reserves after China, at US$1.238 trillion. But only a fraction is readily available for use, in the form of funds such as deposits parked with central banks and the Bank for International Settlements.

On Sep 22, Japan spent up to a record 2.8 trillion yen in its first yen-buying intervention since 1998, equivalent to about a tenth of the US$136 billion in immediately available reserve funds as of September.

That followed an estimated 5.4 trillion to 5.5 trillion yen of intervention last Friday, according to estimates by Tokyo money market brokerage firms derived from their daily calculation of the outstanding balance of excess reserves at the Bank of Japan after accounting for transactions involving the private sector.

The reduction in reserves excluding these is estimated as the amount of yen-buying intervention, which absorbs the currency from excess reserves parked at the central bank.

The finance ministry confirmed last month's yen-buying action but has kept mum on whether they have intervened since. Sources said the one last Friday was responsible for the US dollar's falling more than 7 yen after touching a 32-year high of 151.94 yen.

The US dollar's drop quickly reversed, however, prompting renewed stealth intervention on Monday as it again approached 150 yen. The greenback was trading near 149 yen on Tuesday after hitting 145.28 yen on Monday.

The ministry will announce on next Monday the amount it spent on intervention between Sep 29 and Oct 27. Quarterly data in early November will show the amount of daily intervention operations in the July-September quarter. REUTERS

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