Japan Deploys Record ¥15.4 trillion to Support Yen Amid Weakness

Japanese authorities intervened in foreign-exchange markets for a total of 15.4 trillion yen (? $96.5 billion), the largest single-month outflow on record, according to Finance Ministry data released on August 28. The intervention spanned July 30 through August 26 and was aimed at pulling the yen away from four-decade lows that threatened exporters and raised import costs.

Reuters

The yen had slipped to near ¥164 per dollar, its weakest level in 40 years, prompting the Bank of Japan (BOJ) to buy yen on July 30 and July 31, including a rare joint action with the United States. Low domestic interest rates—kept low by the BOJ’s gradual tightening—made the yen attractive for funding global trade, while Japan’s heavy reliance on energy imports (about 95 % from the Middle East) heightened sensitivity to currency weakness amid the Iran war.

Reuters

• 15.4 trillion yen intervened over the month, surpassing the prior daily record of ¥6.3 trillion set on April 30.

Reuters

• BOJ estimates suggest the July 30 purchase could have reached ¥9.6 trillion, though the exact figure remains undisclosed.

Reuters

• The yen moved from roughly ¥163 per dollar to a high of ¥155.20 by August 3, then settled around ¥159.50 from August 10 onward.

Reuters

• Market participants assign a 65 % probability of a BOJ rate hike at the September meeting.

Reuters

The Finance Ministry’s release underscores Tokyo’s resolve to defend the currency. BOJ officials have signaled willingness to accelerate tightening, despite holding rates steady at the July meeting. U.S. officials indicated that Japan could draw on a COVID-era Federal Reserve backstop—a facility created in 2020 to provide dollar liquidity without selling U.S. Treasuries—if larger interventions become necessary. Detailed daily breakdowns of the intervention will not be published until quarterly figures are released, likely in early November.

Reuters