Japan Unleashes Record Yen Intervention, Spends $96 Billion in One Month
Japan intervened in the foreign exchange market to boost its currency, spending a record $96 billion between July 30 and August 26. This intervention was aimed at mitigating economic damage from sharp fluctuations in exchange rates.
The finance ministry data showed that this is the largest monthly intervention on record, with the yen weakening 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 Bank of Japan intervened in the market under the instruction of the ministry, buying yen as a concerted action with the United States. This joint intervention was carried out for the first time since 2011 to stop the yen rising after a huge earthquake and last occurred in 1998 when Washington and Tokyo bought yen.
Experts say that the Trump administration also acted to reduce the US trade deficit, as a weak yen helps Japanese exporters. However, this is bad news for Japan's resource-poor economy, which imports oil at higher costs due to the weak currency.