According to data from Japan’s Ministry of Finance, Japan spent a record $74 billion over the past month to support the yen’s exchange rate after it fell below 160 against the U.S. dollar. This marks the first time since 2024 that the Japanese government has intervened in the market.
The ministry released data on Friday covering the period from April 28 to May 27, showing that the yen experienced multiple sharp rallies during this time, with cumulative intervention amounting to 11.73 trillion yen (73.6 billion U.S. dollars).
These data highlight the authorities’ determination to prevent the yen from plummeting freely, and mark the first official acknowledgment of market intervention following the yen’s drop to 160.72 against the dollar. A person familiar with the matter said Japan intervened on April 30, after which the market had speculated for several days that Japan would further buy yen.
The final total exceeded expectations. Earlier estimates, based on central bank liquidity data, suggested that the total spending after two rounds of intervention could reach as high as 10.08 trillion yen. The actual figure was higher, indicating greater difficulty for Japan’s Ministry of Economy in supporting the yen exchange rate and potentially fueling speculation about multiple rounds of government intervention.
“This suggests that there may have been covert intervention in the yen exchange rate within the 158.50–159.50 range,” said Rinji Maruyama, senior foreign exchange and interest rate strategist at SMBC Nikko Securities. “This could likely be interpreted as evidence that even with covert intervention, the yen’s depreciation was not halted, potentially reinforcing arguments about the limitations of unilateral intervention.”
Traders will have to wait until early August to get more accurate information about the actions taken, when the department will release second-quarter data detailing the specific timing and scale of daily operations.
Previously, Japan’s Ministry of Health, Labour and Welfare planned to release detailed data on Japan’s foreign exchange reserves as of the end of May next week. These figures could reveal how Tokyo has been raising funds for its yen-buying operations. Since 2022, Japan has repeatedly sold portions of its U.S. Treasury holdings to finance currency support measures. As of the end of April, Japan held $1.17 trillion in foreign exchange assets.
U.S. Treasury Secretary Scott Bentsen recently stated that sharp foreign exchange fluctuations are undesirable, signaling the U.S.’s tacit acceptance of Tokyo’s move. However, selling Treasury bonds to fund intervention could anger Bentsen, as it might push up U.S. Treasury yields.
Despite risks posed by the volatile situation in the Strait of Hormuz and a strong dollar, Japan’s Ministry of Health, Labour and Welfare will keep the yen exchange rate within a 5-yen fluctuation range.
However, questions about the effectiveness of this unprecedented intervention may persist, especially since the dollar has already recovered most of its losses following the intervention. On Friday evening, the yen traded at around 159.29 against the dollar.
“There was certainly some impact at the time. But I don’t think they succeeded in changing the market’s sentiment,” said Bart Jorlin, manager of State Street Bank’s Tokyo branch. He believes further action remains possible in the future.
Officials continue to send signals indicating they are prepared to act again if necessary. Finance Minister Mayuko Katsuyama reiterated earlier Friday her willingness to address excessive exchange rate volatility.
Wakabayashi said, “If the market breaks above 160 and the rally appears too easy, I believe we will see intervention measures introduced.”
