Japan has reportedly spent a record 15.4 trillion yen to support the weakening yen, stepping in heavily to stabilize the currency as it falls to its lowest levels in a decade, according to Finance Ministry data released on Friday.
The scale of the intervention shows the level of Tokyo’s resolve to pull the yen away from four-decades low as exchange rate depreciation squeezes profitability at Japan’s dominant exporters and elevates import costs, including energy.
The Bank of Japan gradual monetary tightening has kept Japan’s interest rates low compared with markets such as the US maintaining investor commitment to fund global trades with cheap yen.
The BOJ maintained interest rates in July, though policymakers have opened the door to aggressive tightening, and markets put 65% odds on a rate hike at the next meeting in September.
BOJ data this month further demonstrate the intervention on July 30 could have been as much as 9.6 trillion yen which would shatter the daily record of 6.3 trillion yen from April 30 this year. It has been observed that the yen shot from around 163 per dollar initially to as strong as 155.20 by August 3 before hovering around 159.50 stuck since August 10.
In addition, the US Treasury Secretary Scott Bessent said this month that Washington will support Tokyo’s effort to stabilize the yen, warning that its significant mispricing could cause problems for other currencies.
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