Japan Spends ¥9.7 Tril. in Forex Interventions during Holiday

According to the Finance Ministry, Japan has spent a record amount of ¥9,788.5 billion in foreign exchange market interventions between April 26 and Wednesday. This sudden intervention came after the dollar experienced a sharp dip against the yen on April 29 and May 2 during Japan's Golden Week holiday period. It is believed that Japanese authorities conducted stealth yen-buying dollar-selling interventions during this time. The last time Japan intervened in foreign exchange markets was in autumn 2022, when they spent ¥9,188.1 billion. Despite the interventions from Japan, the yen remains weak against the dollar. Finance Minister Shunichi Suzuki has promised to respond appropriately to excessive movements, stating, “This basic idea will not change in any way.” During Japan's national holiday season, the dollar suddenly lost ground sharply against the yen on April 29 and May 2. Foreign exchange analysts believe that this is due to Japanese authorities conducting stealth yen-buying dollar-selling interventions. On April 29, when the Tokyo market was closed, the dollar sank below ¥155 after surging above ¥160 in overseas trading. Speculation arose that intermittent yen-buying dollar-selling interventions worth ¥5 trillion were conducted amid thin trading to prevent sharp depreciation of the yen. Then, in the early hours of May 2, the dollar sagged below ¥154 from around ¥157.5. Speculation arose of an additional intervention worth about ¥3 trillion. Masato Kanda, vice finance minister for international affairs, who oversees currency interventions, has warned of possible interventions while refraining from commenting on whether such actions were actually taken. Meanwhile, U.S. Treasury Secretary Janet Yellen has stated that currency interventions should only be conducted rarely. Despite this, Japanese authorities are prepared to intervene further if necessary. Japan's record amount of foreign exchange market interventions has caused concern. The interventions could potentially distort market forces, making it difficult to establish market trends. The record amount of money spent on these interventions has not only raised eyebrows but led to questions about the effectiveness of these interventions in the long run. While the yen remains weak against the dollar, it is uncertain how long this will last and whether Japan will continue to intervene in foreign exchange markets. Despite critical concerns, Japanese authorities are expected to continue to intervene in foreign exchange markets if necessary, in order to maintain stability and prevent excessive movements. However, it remains to be seen how this will affect the market and whether it will distort long-term market trends. As Tokyo continues to monitor the situation, the world watches with bated breath to see how this will unfold