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Japan has probably spent ¥5 trillion on currency intervention

Yomiuri Shimbun file photo
The Japanese bank

Tokyo, April 30 (Jiji Press) – Japanese authorities are believed to have carried out a currency market intervention worth around ¥5 trillion on Monday, it was learned on Tuesday.

The estimate was provided by market participants based on data from the Bank of Japan on expected changes in commercial financial institutions’ current account balances with the bank.

On Monday, the dollar fell below ¥155, just hours after surpassing ¥160 for the first time in about 34 years. This happened in overseas trading because the Tokyo market was closed for a national holiday.

The abrupt moves fueled speculation that Japanese authorities repeatedly intervened to buy yen and sell dollars. The government does not want to say whether there is such an intervention.

The largest amount Japan has spent buying the yen in a single day is ¥5,620.2 billion, used on October 21, 2022, when the dollar rose almost ¥152.

Current account balances at the BOJ change in line with the movements of funds deposited with the central bank by private financial institutions. On Tuesday evening, the BOJ published projections of changes in current account balances for Wednesday.

According to the data, Treasury and other funds, which reflect the movements of the funds used in market intervention if such action is taken, are expected to post a deficit of ¥7.56 trillion.

When interventions are carried out to buy the yen, the government sucks yen funds from financial institutions, putting pressure on the balance of government bonds and other funds.

The expected deficit is about 5.5 trillion yen larger than about 2 trillion yen that the market had expected.

The yen’s decline accelerated after the BOJ kept its monetary policy intact on Friday. Market players concluded that BOJ Governor Kazuo Ueda showed no major concerns about the yen’s recent decline at a press conference after the decision.

The dollar was trading below ¥156 before the BOJ’s decision was announced.

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