Japan's April yen-buying intervention sets new daily record

JAPAN said on Wednesday (Aug 7) that it conducted a record single-day yen-buying intervention in April, selling 5.92 trillion yen (S$53.5 billion) worth of US dollars in a fight against a falling yen at that time.

Quarterly data from the Ministry of Finance (MOF) showed that Japan also spent 3.87 trillion yen on May 1.

The previous single-day record for such intervention was 5.62 trillion yen spent on Oct 21, 2022, according to MOF data available since 1991.

The latest data represents a detailed daily breakdown of the previously revealed 9.79 trillion yen intervention made during the period from April 26 through May 29.

The two rounds of massive US dollar-selling intervention helped push up the yen by 5 per cent from a 34-year low of 160.245 per US dollar, but failed to reverse the yen’s longer-term weakness.

The yen resumed its downturn and slid to a 38-year low of 161.76 per US dollar in July, prompting Tokyo to intervene again and spend another 5.53 trillion yen to support its currency.

Later in July, the yen staged a sharp rally as traders aggressively unwound carry trades after a slew of economic data raised the prospect of a US economic downturn and bigger rate cuts from the Federal Reserve.

Separate data from the finance ministry on Wednesday showed that Japan’s foreign reserves fell to US$1.22 trillion at the end of July, down US$12.4 billion from a month earlier, largely due to a drop in foreign securities holdings.

The decline in reserves reflect the sale of its US Treasury holdings to finance the dollar-selling, yen-buying intervention, analysts said.

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Japanese authorities would not reveal the make-up of the country’s foreign reserves, but most of the foreign securities holdings are believed by economists to be in US Treasuries. REUTERS