An analysis of Bank of Japan (BOJ) account data suggests the Japanese government likely spent around $53 billion on Thursday to prop up the yen. Based on the BOJ's Friday account figures and estimates from money broker forecasts, the intervention is calculated to be approximately ¥8.45 trillion ($52.8 billion). If confirmed, this would mark the largest single-day currency intervention ever conducted by Tokyo authorities.
The growing scale of the intervention reflects both Japan's strong resolve to defend the yen and the increasing difficulty in curbing speculative bets against the currency. Yuichiro Takai, a researcher at Totan Research, stated that the data almost certainly confirms Japan's market intervention. He initially estimated the scale at around ¥9.6 trillion but revised it slightly lower after factoring in other elements.
During Thursday's New York trading session, the yen surged as much as 3.3% against the US dollar, its biggest intraday gain since December 2023. A market source familiar with the matter indicated that Japan did intervene in the foreign exchange market to support the yen that day, adding that US authorities conducted a rate check around 2:30 a.m. Tokyo time. Reports also suggested coordination between Japan and South Korea, with Seoul selling dollars during the New York session, causing the Korean won to rise to its highest level since mid-October overnight.
On Friday evening in Tokyo, the yen was trading around ¥159.95 against the dollar. Earlier that day, the BOJ held its policy interest rate steady. Following the meeting, BOJ Governor Kazuo Ueda hinted at a possible rate hike as soon as September, but his relatively hawkish stance did not provide significant support for the yen.
Japanese officials have declined to confirm whether they intervened, but the top currency diplomat, Atsushi Mimura, suggested that Tokyo has received support from other nations, including the United States. If Thursday's action is confirmed, it would be Japan's first intervention since the "Golden Week" holidays at the end of April. During that period, Japan spent a record ¥11.73 trillion on intervention. While the Ministry of Finance has not yet disclosed the specific amounts for each day of that intervention, analysis of government data suggests Thursday's estimated figure could match or even break the record for the largest single-day currency intervention.
The BOJ's preliminary forecast for current account balances on Monday, released Friday, indicated a decrease of ¥8.2 trillion due to fiscal factors, whereas the average forecast from money brokers like Tokyo Tanshi, Central Tanshi, and Ueda Yagi Tanshi had predicted an increase. The BOJ's first published forecast for current account balances is typically considered the best gauge for estimating intervention scale.
Intervening just before the BOJ's policy meeting stands in stark contrast to the approach taken three months ago. Prior to the late-April intervention, which followed the BOJ's rate decision, Japanese officials had clearly signaled their readiness to act. In contrast, over the past month, top currency diplomat Atsushi Mimura had maintained a relatively low profile, likely to enhance the element of surprise.
The Japanese government confirmed on Friday that Mimura will continue in his role as Japan's top currency diplomat, leading future intervention strategies. A market source familiar with the matter stated that Thursday's intervention was coordinated with the US through rate checks. This renewed cooperation suggests Washington may also be advising Tokyo on the best strategies and timing for market action.
Former President Donald Trump has frequently criticized countries like Japan for maintaining weak currencies to gain a competitive edge. However, US Treasury Secretary Scott Bessent has previously stated that rather than direct intervention, the BOJ should focus on raising interest rates to bring the yen back to reasonable levels.
Market attention now shifts to the quarterly intervention report, set to be released by the Ministry of Finance next Friday. That report will detail daily intervention operations from April to June, and is expected to provide fresh clues on how Japanese authorities chose their timing and positioned themselves ahead of speculative traders.
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