Japan Sets Record Yen Intervention Amid Persistent Pressure

Japan's Ministry of Finance (MOF) released data showing that the country conducted a record yen-buying intervention in April, selling $40 billion worth of its currency reserves. The largest operation took place on April 30, with authorities intervening to stem the yen's slide.

The MOF figures show that Japan intervened on three days from April 30 through May 6, when market liquidity was thin due to Golden Week public holidays. This intervention helped lift the yen from a near two-year low of 160.725 per dollar to around 155 by May 6, but did not reverse the currency's broader downtrend.

However, the yen resumed its downturn and slid to 40-year lows below 163 per dollar in July, prompting Japan to intervene again last week in coordination with the U.S. Central bank data indicated that Japan may have spent as much as $58.97 billion on July 30 and $36.58 billion on the following day in potentially the largest-ever yen-buying intervention.

To soothe market concern about the limits of Japan's capacity for large-scale intervention, Tokyo and Washington have said Japan could utilize a COVID-19 era Federal Reserve backstop for major central banks. However, Federal Reserve data showed that no repurchase agreements were executed under foreign official accounts in the week through August 5, indicating that Japan did not tap the facility in its latest yen-buying operation.