Japan's Yields Rise as Foreign Reserves Plummet After Record Yen Intervention

Japan's foreign reserves declined significantly in August following the government's record intervention to support the yen. The country's reserve assets fell by $79.6 billion, or 6.2%, from the previous month to $1.208 trillion as of August 31, according to Japan's Finance Ministry.

The decline was a result of the government's large-scale intervention in foreign-exchange markets between July 30 and August 26. During this period, authorities spent 15.399 trillion yuan ($99 billion) to support the national currency, making it the largest monthly currency intervention ever undertaken by Japan.

Japan's reserve assets are comprised of $994.98 billion in foreign-currency reserves, including $839.56 billion in securities and $155.42 billion in deposits. The country also held $124.10 billion in gold, $61.17 billion in International Monetary Fund special drawing rights, and an $11.42 billion reserve position at the IMF.

Markets will next focus on the Bank of Japan's September 17-18 monetary-policy meeting, where higher Japanese interest rates could provide more lasting support for the yen by narrowing its yield disadvantage relative to other major currencies.