Japan's Foreign Exchange Reserves Plummet by Record Margin
The Japanese government's foreign exchange reserves fell by a record margin in August, down USD 79.5 billion (6.2%) from the previous month to USD 1.2075 trillion. This decline marks the fourth consecutive month of reduction and the largest decrease since April 2000, when the calculation standard was revised.
The intervention in the foreign exchange market by the Japanese government and the Bank of Japan since late July to defend the yen's value has reduced foreign exchange reserves. The Ministry of Finance reported that the amount of intervention in the foreign exchange market from July 30 to August 26 totaled 15.3993 trillion yen, exceeding the previous record of 11.7 trillion yen.
The Japanese government may have used dollar funds secured by selling U.S. government bonds to buy the yen, but the Ministry of Finance did not disclose specific transaction details. According to Finance Minister Satsuki Katayama's statement, it is unlikely that Japan will sell U.S. government bonds to intervene in the foreign exchange market in the future.