Japan Spent $6bn in Monday's Suspected Yen Intervention

Japan was likely to have spent up to 900 billion yen ($6 billion) on its second straight day of suspected currency intervention on Monday, analysts said on Tuesday.

That amount would bring the total for yen-buying since last month to as much as 9.2 trillion yen ($61.8 billion), according to market estimates on Tuesday.

Authorities’ so-called stealth intervention in rapid succession has underscored their resolve in fighting what they have characterised as “intolerable and speculative” yen-selling, although the impact has proved short-lived.

Japan has the world’s second-largest foreign reserves after China, at $1.238 trillion. But only a fraction is readily available for use, in the form of funds such as deposits parked with central banks and the Bank for International Settlements.

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On September 22, Japan spent up to a record 2.8 trillion yen in its first yen-buying intervention since 1998, equivalent to about a tenth of the $136 billion in immediately available reserve funds as of September.

That followed an estimated 5.4 trillion to 5.5 trillion yen of intervention last Friday, according to estimates by Tokyo money market brokerage firms derived from their daily calculation of the outstanding balance of excess reserves at the Bank of Japan after accounting for transactions involving the private sector.

The reduction in reserves excluding these is estimated as the amount of yen-buying intervention, which absorbs the currency from excess reserves parked at the central bank.

The finance ministry confirmed last month’s yen-buying action but has kept mum on whether they have intervened since. Sources said the one last Friday was responsible for the dollar’s falling more than 7 yen after touching a 32-year high of 151.94 yen.

The dollar’s drop quickly reversed, however, prompting renewed stealth intervention on Monday as it again approached 150 yen. The greenback was trading near 149 yen on Tuesday after hitting 145.28 yen on Monday.

The ministry will announce next Monday the amount it spent on intervention between September 29 and October 27. Quarterly data in early November will show the amount of daily intervention operations in the July-September quarter.