The Gulf Time Newspaper One of the finest business newspapers in the UAE brought to you by our professional writers and editors.
Japan spent a record 6.3 trillion yen ($42.4 billion) in October to counter the yen’s sharp slide against the dollar, as it tried to limit speculative moves adding to pressure on the currency.
The finance ministry disclosed on Monday data for the period between September 29 to October 27. Central bank figures and market estimates of money flows with the government had suggested that a suspected intervention on October 21 cost around 5.5 trillion yen ($37.2 billion).
Other moments of high volatility including a sharp move on October 24 have kept traders guessing over how often authorities have been operating in the markets.
The number came in lower than some economists had expected.
“A figure around 7.5 trillion yen would come as no surprise,†said Tsuyoshi Ueno, a senior economist at NLI Research Institute in Tokyo, before the data release. He also saw Japan as spending 5.5 trillion yen on October 21, along with roughly 1 trillion yen on October 24 and another 1 trillion yen on other days.
The government has chosen to remain silent over further direct market action in the past month or so, a strategic shift after it announced its first yen-buying intervention in 24 years on September 22. The 2.8 trillion yen move in September failed to reverse the yen’s falling trend, and the currency dropped to almost 152 against the dollar before its sharp surge on October 21.
The yen was around 148.46 per dollar on Monday evening in Tokyo.
Japan had about $1.24 trillion worth of foreign reserves as of the end of September, according to the finance ministry. Among its most liquid foreign reserve assets are deposits amounting to $135.5 billion with foreign central banks and the Bank for International Settlements.
Still, Masato Kanda, the finance ministry’s top currency official, has said resources for intervention are limitless.
US Treasury Secretary Janet Yellen declined to comment on reports that Japan had intervened again in currency markets. She said the US government hadn’t received any notice from Tokyo. Kanda later said that Yellen respected Japan’s non-disclosure stance.
The yen is expected to remain under downward pressure versus the dollar as long as interest rates continue to widen between the US and Japan.
The yen’s fall following the BOJ’s decision last week was more limited than the decline after the central bank’s September 22 meeting that triggered the first intervention.
—Bloomberg