Japan Spends Record $96 Billion on Yen Intervention
The Japanese government has intervened in the foreign exchange market to boost the yen, spending a record $96 billion in August. The finance ministry announced that between July 30 and August 26, Japan spent 15.4 trillion yen to ease economic damage from sharp fluctuations in exchange rates.
The Bank of Japan intervenes under the instruction of the ministry to stabilize the economy. The intervention was prompted by the yen's weakness due to the gap between Japanese and US interest rates, high oil prices, and concerns about Prime Minister Sanae Takaichi's spending plans further swelling Tokyo's enormous debts.
The operation was a joint effort with the US, which also intervened in the market for the first time since 1998. The US action is seen as a move to reduce its trade deficit and help Japan invest $550 billion in the United States under a 2025 trade deal.