Japan spent record $96.5 billion to support yen over past month, ministry data shows

Japanese authorities deployed a record 15.4 trillion yen, equivalent to $96.5 billion, in foreign exchange market interventions over the past month to bolster the weakening yen. The data, released Friday by the Finance Ministry, underscores Tokyo's determination to arrest the yen's slide towards four-decade lows.

The currency's weakness poses a significant threat to Japan's major exporters by reducing the value of their overseas earnings and simultaneously inflates the cost of imports, particularly energy, of which Japan relies heavily on foreign sources. The ongoing conflict in the Middle East further exacerbates these concerns by potentially disrupting energy supplies.

Despite the substantial intervention, the yen has remained under pressure. This is partly attributed to the Bank of Japan's cautious approach to monetary policy tightening compared to other major economies like the U.S., which keeps Japanese interest rates low. This differential encourages investors to continue funding global trades with the cheap yen. While the BOJ maintained its rates in July, policymakers have signaled a potential shift, with markets pricing in a 65% chance of a rate hike at the upcoming September meeting.

Friday's data covers the period from July 30 to August 26, offering a total figure for the interventions. Earlier data from the Bank of Japan suggests that the intervention on July 30 alone might have reached 9.6 trillion yen, a figure that would dwarf the previous daily record. This period also saw rare joint intervention efforts with the U.S. and coordinated support from the Bank of Korea, aimed at amplifying the impact. The U.S. has affirmed its commitment to supporting Japan's efforts, with Treasury Secretary Scott Bessent stating Washington will do "whatever it takes" to stabilize the yen.

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whatever it takes