Japan Spends $73 Billion in This Round of Currency Intervention, Setting a New Record

The data released by Japan's Ministry of Finance on Friday showed that during the period from April 28 to May 27, Japanese authorities invested a record 11.7 trillion yen (approximately 73 billion US dollars) to support the yen exchange rate. This marks the largest amount of capital ever deployed by Japan in a single round of exchange rate intervention.

This year to date, influenced by Prime Minister Takashi Sawa's inclination towards loose policy statements, the Bank of Japan's staunch defense of the 0.75% interest rate, and the high oil prices caused by conflicts in the Middle East leading to expectations of the Federal Reserve delaying rate cuts, the yen has been under continuous pressure. The situation reversed during the Golden Week when the yen against the US dollar touched the 160 range, and the authorities intervened by buying yen on April 30, May 1, May 4, and May 6, pulling the exchange rate back to the 155 to 158 range. However, the positive effects of the intervention were not lasting. On Friday, at the end of the Tokyo foreign exchange market, the yen against the US dollar exchange rate softened again, approaching 159.30.

Bank of America strategist Shuu Yoshida pointed out that despite having spent about 10 trillion yen, Japan still has over 1 trillion US dollars in foreign exchange reserves, fully capable of "buying time" through intervention before oil prices fall. What is different from the past is that this round of intervention has obtained explicit support from Washington.

The Japanese Minister of Finance, Sayuki Katayama, said that he had received "full understanding" from US Treasury Secretary Scott Bessent. Bessent's public statements on X following his meeting with Bank of Japan Governor Kazuo Ueda have been interpreted by the market as putting pressure on the Bank of Japan to raise interest rates.

Currently, the foreign exchange market's bets on the Bank of Japan announcing a rate hike at the meeting on June 15-16 have soared to 73%.