"Japanese Authorities Possibly Used 48 Trillion Won for Foreign Exchange Market Intervention"

On the 23rd, an employee is organizing Japanese yen and US dollars at the Hana Bank Counterfeit Response Center in Jung-gu, Seoul. [Image source=Yonhap News]

There is speculation that Japanese foreign exchange authorities may have used 5.5 trillion yen (approximately 48.4 trillion won) on the 29th to prevent a sharp fluctuation in the yen-dollar exchange rate.

On the 30th, major foreign media reported based on the current account balance announced by the Bank of Japan that "Japanese authorities may have spent 5.5 trillion yen yesterday to support the yen."

Earlier, the yen-dollar exchange rate briefly surpassed 160 yen per dollar in the Asian foreign exchange market for the first time in 34 years since April 1990. However, in the afternoon, it sharply dropped by more than 4 yen from the 159 yen range to the 155 yen range per dollar, then rose again to the 157 yen range before falling more than 2 yen to the late 154 yen range.

This led to widespread speculation in the market that Japanese authorities intervened.

When the Japanese government and the Bank of Japan intervene to raise the value of the yen by purchasing yen, yen moves from the current accounts that private financial institutions hold at the Bank of Japan to the treasury, causing a decrease in current account balances.

The foreign media calculated the amount that Japanese foreign exchange authorities are estimated to have used to defend the exchange rate based on this.

However, Japanese foreign exchange authorities remain silent on this matter.

According to Nihon Keizai Shimbun (Nikkei) and NHK, Masato Kanda, Vice Minister of Finance, responded to reporters' questions about foreign exchange market intervention on the day by saying, "If excessive fluctuations (in the exchange rate) are caused by speculation, it adversely affects the lives of the people," and "We will respond according to international rules."

Regarding whether the foreign exchange authorities intervened in the market, he did not answer as he did the previous day, saying, "I have nothing to say."

Japanese Prime Minister Fumio Kishida was also asked about this on the same day but said, "I will refrain from commenting on whether there was foreign exchange market intervention.".