Japan's Foreign Reserves Plummet 6.18% Amid Record Currency Intervention

Japan's foreign exchange reserves plummeted to $1.2075 trillion at the end of August, marking a record 6.18% decline and the largest drop on record since comparable data became available in April 2000.

The decline was driven by a sharp fall in foreign securities, including U.S. Treasuries, which fell by $87.7 billion to $839.5 billion, the biggest decline in both amount and percentage terms since 2000.

The Ministry of Finance attributed the drop to coordinated Japan-U.S. yen-buying, dollar-selling currency intervention executed at the end of July, with the largest intervention on record totaling ¥15.3993 trillion between July 30 and August 26.

Market participants are now closely watching how this sharp drawdown will affect Japan's capacity for future intervention, as the country's foreign reserves have declined for four consecutive months.