Japan's April Yen Intervention Set Daily Record as Pressure Persists
Japan's April 30 yen-buying intervention was its largest ever at 6.28 trillion yen, yet the currency has slid past 158 per dollar again.
Japanese authorities executed their largest single-day yen-buying intervention on record in April, spending 6.28 trillion yen ($39.64 billion) on April 30 to arrest the currency's slide. The figure, released by the Ministry of Finance on Friday, surpassed the previous daily record of 5.92 trillion yen set on April 29, 2024.
The operation was part of a three-day intervention campaign that ran from April 30 through May 6, timed to exploit thin market liquidity during Japan's Golden Week holidays. In total, authorities spent 11.7 trillion yen between April 28 and May 27, a monthly record.
The intervention lifted the yen from a near two-year low of 160.725 per dollar to around 155 by May 6, but the relief proved temporary. The currency resumed its slide, touching 40-year lows below 163 per dollar in July, prompting another round of intervention last week—this time coordinated with the United States.
Market participants remain on high alert as the yen again edges past 158 per dollar, with investors awaiting U.S. employment data that could influence the Federal Reserve's interest rate path.
Central bank data suggests Japan may have spent as much as $58.97 billion on July 30 and $36.58 billion the following day in potentially its largest-ever intervention. Official records are due on August 28.
To ease concerns about the limits of Japan's intervention capacity, Tokyo and Washington have noted Japan could tap a COVID-19 era Federal Reserve backstop for major central banks. The facility, introduced in 2020, allows Japan to raise dollar liquidity without outright sales of U.S. Treasuries.
However, Federal Reserve data shows no repurchase agreements were executed under foreign official accounts in the week through August 5, indicating Japan did not use the facility in its latest operation.
In the coordinated intervention, the U.S. Treasury sold euros to buy yen. The European Central Bank was informed of the trade after the fact, according to a Financial Times report. Some senior ECB officials viewed the U.S. decision to use euros as an unprecedented breach of longstanding conventions on cooperation between Western monetary authorities. A Treasury spokesman confirmed the reallocation of reserve assets.