Japanese intervention in currency markets reaches 10 trn: report

Tokyo: Japanese intervention in the currency market on Monday to stem the yen’s rise reached a record 10 trillion yen ($128 billion), more than double the previous record set in August, the Asahi newspaper reported.

In its previous solo intervention on 4 August, the Japanese authorities sold 4.5 trillion yen, an all-time high for one-day operation. Asahi cited no sources for its report.

Japan stepped in as the yen repeatedly hit record highs against the dollar, adding to existing concerns that it would hurt the export-reliant economy if the gains were left unchecked.

Tokyo’s latest round of intervention, second in less than three months and its third this year, followed repeated warnings about the yen’s strength and came just days before the Group of 20 leaders’ summit in Cannes, France.

Finance Minister Jun Azumi said on Monday that the country would continue to intervene until it was satisfied with the results.

In September, Azumi said the government would increase the amount set aside for market interventions, effectively raising the amount available to a record 46 trillion yen. If the size of Monday’s intervention were confirmed that would still leave the government with a 36 trillion yen war chest.

Market focus was on whether Azumi would follow his warning with action with the impact of Monday’s intervention petering out.

“We do not anticipate any form of ‘policy floor’ in dollar/yen to be adopted along the lines of the Swiss National Bank, as Japan’s economic exposures are far more different and authorities have more tools at their disposal,” USB currency strategists wrote in a note.

Following intervention the dollar rallied as high as 79.55 yen on Monday, a three-month peak, after brushing a record low of 75.31 yen.

The US dollar was trading at around 78.40 yen on Tuesday after briefly touching 79.10 yen.

($1 = 77.975 Japanese yen)

Reuters