November 24, 2022
  • November 24, 2022

Japan’s stealth yen intervention aims for maximum impact – finance minister

By on November 1, 2022 0
  • Japan spent a record $43 billion in October to prop up the yen
  • Yen moving in range below 150 yen at dlr since intervention
  • Suzuki warns of risk of excessive yen weakening
  • BOJ’s Kuroda reiterates pledge to keep rates ultra-low

TOKYO, Nov 1 (Reuters) – Japan’s currency interventions have been stealth operations to maximize the effects of its market forays, Finance Minister Shunichi Suzuki said on Tuesday, after the government spent a record amount of $43 billion to support the yen last month.

Bank of Japan Governor Haruhiko Kuroda, however, reiterated the central bank’s determination to keep interest rates extremely low, indicating that the general downtrend in the yen may continue.

Japanese officials remain tight-lipped on exactly when they intervened in the market in October. Full details of their actions will not be available until quarterly intervention data is released. Data for July through September is expected to be released early this month.

“There are times when we announce an intervention right after we’ve done it and there are times when we don’t,” Suzuki said at a press conference on Tuesday. “We do this to maximize the effects to smooth out strong currency swings.”

The finance minister reiterated his warning that authorities are closely monitoring market movements and will not tolerate “excessive currency movements driven by speculative transactions.”

Japan spent 6.35 trillion yen ($42.7 billion) on currency interventions in October to prop up the yen, data showed on Monday, leaving investors eager for clues on how much authorities might intervene. to mitigate the sharp drop in the yen.

A sharp drop in the yen to a 32-year low of 151.94 to the dollar on October 21 likely triggered the intervention, which was followed by another round on October 24. In September, when Japan conducted its first yen buying intervention since 1998, the authorities immediately confirmed their intervention.

Since the October 21 intervention, the yen has been trading in a range below the psychologically important threshold of 150 yen against the dollar. On Tuesday, the Japanese currency changed hands at 148.70 to the dollar, little changed from the previous session.

As the possibility of another round of monetary intervention keeps yen bears at bay for now, investors brace for more volatility ahead of a closely watched US Federal Reserve policy meeting that ends Wednesday. .

The Fed is expected to hike rates by 75 basis points for the fourth straight time, while debating when to downgrade to lower rate hikes to avoid sending the economy into a tailspin .

In a sign that the responsibility for dealing with sharp declines in the yen will lie with the government rather than the central bank, the BOJ’s Kuroda ruled out the possibility of raising Japan’s ultra-low rates anytime soon.

“The Japanese economy is still recovering from the impact of the coronavirus pandemic. As such, there is a need to support the economy with accommodative monetary policy,” Kuroda told parliament on Tuesday.

Kuroda dismissed criticism, raised by some politicians, that the BOJ’s drive to maintain an ultra-loose policy was incompatible with the government’s efforts to stem the yen’s fall.

“Our policy and that of the government complement each other,” Kuroda said. “There is no doubt that the BOJ needs to cooperate closely with the government.”

($1 = 148.6100 yen)

Reporting by Tetsushi Kajimoto; Editing by Kim Coghill, Kenneth Maxwell and Edmund Klamann

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