© Stocksak. As passersby walk past, they are seen in front an electric monitor showing the exchange rate between Japan’s Japanese yen and the U.S. dollars. This was outside a Tokyo, Japan brokerage on October 21, 2022 REUTERS/Isseikato
Yoshifumi Takemoto and Shinji Kitamura
TOKYO, Stocksak – Japan intervened on Friday in the foreign exchange market to buy yen. This was a month following a 32 year low at 152 to $16. A government official and another person familiar said to Stocksak.
Japan has been trying to shore up the battered currency by sticking with ultra-low interest rate. This counters a global trend of tightening money policy and widening gap between U.S. interest rates and Japan’s.
After the dollar rose above 151.94 yen (its highest since 1990), the intervention drove Japan’s currency down more 7 yen to an all-time low of 144.50yen. The U.S. currency last fell 1.8% at 147.34yen.
One source claimed that the Ministry of Finance (MOF), intervened in multiple stages starting at 9:35 p.m. (1235 GMT)
After meeting with Anthony Albanese of Australia, Prime Minister Fumio Kishhida stated to reporters that “We are maintaining a stance of being prepared to take appropriate actions against excessive forex volatility.”
Kishida declined further comment, saying that he would not make any specific comments about forex when asked about Friday’s intervention.
Masato Kanda (Japan’s top currency diplomat) also declined to comment on whether the MOF intervened.
Kanda, the vice-finance minister for international affairs, said to Stocksak that they won’t comment on whether or not an intervention was conducted. This is a position the MOF has maintained over the past few weeks.
He said that the ministry could not confirm whether an intervention took place for some time, signalling possible “stealth interventions” to engage in a war against investors who are selling the yen.
On Sept. 22, the MOF also bought Japanese yen. Investors were focused on the growing divergence between the BOJ’s loose monetary policy and U.S. Federal Reserve’s aggressive rate hikes.
Shunichi and Kanda, the Finance Minister, have repeatedly indicated that they are ready to intervene and warned against excessive volatility. Suzuki stated that authorities were ready to take strict action against speculators before Friday’s intervention.
Many market players are skeptical that Tokyo can reverse the yen’s downward trend with a single intervention, even with Japan’s $1.33 trillion foreign reserves.
The Group of Seven industrial nations agreed this month to closely monitor recent volatility, but they did not indicate their readiness for joint intervention.
Tokyo money market brokerage firms estimated that Japan purchased a record 3.6 trillion Japanese yen ($24billion) in September’s action.
($1 = 147.6400 yen)