Yen Resumes Fall as Report Shows Currency Intervention Cost over $42 Billion

According to the finance ministry, Japan spent a record $42.8 billion this month on currency intervention to support the yen. Investors were watching for signs of how much more the government might do to mitigate the JPY’s precipitous decline.

The 6.3499 trillion yen ($42.8 billion) figure was about in line with Tokyo money market brokers’ projections, who believed Japan had likely spent up to 6.4 trillion yen over two straight trading days of unannounced operations.

The intervention, which was followed by another on October 24, was probably brought on by the sharp decline in the JPY to a 32-year low of 151.94 to the dollar on October 21.

However, it was almost twice as much as the 2.8 trillion yen that Tokyo spent last month during its first intervention that involved buying and selling yen and dollars in more than 20 years. The most recent intervention records span the dates of September 29 and October 27.

The interventions contributed to a temporary but immediate decline in the value of the dollar against the yen of more than 7 yen on October 21 and another temporary decline of about 5 yen on October 24. Since then, there has been increased pressure on the JPY.

Yen in More Trouble as the Boj Plans on Maintaining Ultra-Loose Policy Stance

The dollar was up again late on Monday, up 1% at 148.45, as the Bank of Japan (BoJ) remained committed to ultra-low interest rates and the Federal Reserve focused attention on persistent inflation and dampened prospects of slower interest rate hikes.

Japan’s currency intervention data, which includes daily spending statistics given in quarterly reports and monthly totals provided at the end of each month, is widely scrutinized for hints about how much more Japan could be willing to spend in its incursions into the currency market.

The finance ministry avoided commenting on its alleged market interventions this month, adopting a covert strategy, so Monday’s statistics will be subject to more scrutiny. It did so immediately after the yen-buying move of the previous month.