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Japan Spends Record $62 Billion in Unsuccessful Bid to Strengthen Yen

Japan Spends Record $62 Billion in Unsuccessful Bid to Strengthen Yen

May 31, 2024

Japan Spends Record $62 Billion in Unsuccessful Bid to Strengthen Yen

Japan's Finance Ministry has confirmed that it expended a record ¥9.8 trillion (approximately $62.2 billion) in a month-long effort to support the value of the yen, which had dropped to a 34-year low against the US dollar. The substantial intervention took place mainly on two instances between April 26 and May 29, particularly on April 29 and May 1.

The figures, surpassing earlier estimates of ¥9.4 trillion, also exceeded the total amount spent in 2022 during the last currency intervention. The 2022 interventions amounted to ¥9.2 trillion over three separate occasions in September and October. The latest operations, while similar in USD value, indicate a substantial increase in yen terms.

Bloomberg reported that this level of spending demonstrates Japan's determination to counter the market forces betting against the yen. However, the intervention has led to mild and short-lived market effects, emphasizing the challenges Japan faces in defending its currency's value.

Market strategists, like Hirofumi Suzuki from Sumitomo Mitsui, commented on the scale of the intervention, noting that the dollar-yen exchange rate has not shown significant reaction, indicating the limited impact of the intervention. Suzuki's sentiment suggests that the market had anticipated the scale of intervention from the Bank of Japan (BOJ).

Previously, Japan's record intervention was in autumn 2011, when it spent ¥9.1 trillion in efforts to weaken the yen post the Fukushima disaster. The recent interventions have temporarily lessened the yen's volatility but have not managed to prevent its decline. Speculators are expected to continue testing the yen's resilience and the BOJ's capacity for further intervention.

More detailed information regarding the intervention is expected to be released with the government's breakdown of foreign reserves and daily operations data, which will include the months of April and May.

As of now, the yen has not returned to the 160 level against the dollar, and while Japan's efforts have slowed the currency's fall, market forces continue to exert pressure on the yen's value.

ZeroHedge Article

Bloomberg Article


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