Japan Has Set A Record For Government Intervention To Support The Yen

According to the Ministry of Finance Japan, the Japanese government participated in the foreign currency market in October last year, selling 6.35 trillion yen ($48 billion) in US dollars, establishing a new record for intervention.

The government decided to intervene after the yen plummeted to 151.94 per dollar on Oct. 21, a 32-year low. On that day, Japan spent a record 5.62 trillion yen ($42.5 billion). Then, on October 24, a second intervention was launched, investing 730 billion yen to halt the currency's decline any further.

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However, this is not the first time Japan has interfered in the yen against the US dollar in the last 24 years. Japan utilized 2.84 trillion yen on September 22 to stem the currency's rapid drop.

In the past, Japan seldom took action to acquire yen and sell dollars. The dollar has now retreated and is trading at 130. However, Japan is a resource-poor nation, and this intervention has increased the local cost of living. It also expressed worry over the yen's appreciation, which might impede the export of Japanese automobiles and electronics.

“The actions were intended at curbing excessive currency fluctuations caused by speculative trading, and they had some consequences,” stated Finance Minister Shunichi Suzuki. Furthermore, the administration said that it would continue to watch the market situation. Currency fluctuations that are stable and reflect economic fundamentals are crucial, and future interventions cannot be ruled out.

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