Japan’s finance ministry on Sept. 22, 2022 intervened within the currency market to bolster the yen, which has plummeted against the U.S. dollar in recent months on the widening policy gap between the US and Japanese central banks.
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Japan intervened within the foreign exchange market on Friday to purchase yen for the second time in a month after the currency hit a 32-year low near 152 to the dollar, a government official and one other person acquainted with the matter told Reuters.
Japan has been attempting to shore up the battered currency because the central bank sticks with ultra-low rates of interest, countering a world trend of tightening monetary policy and widening the gap between U.S. and Japanese rates of interest.
After the dollar rose to 151.94 yen, its highest since 1990, the intervention drove the Japanese currency down greater than 7 yen to a low of 144.50 yen. The U.S. currency was last down 1.8% at 147.34 yen.
The Ministry of Finance (MOF) intervened in several stages from around 9:35 p.m. (1235 GMT), one source said.
Japan’s top currency diplomat, Masato Kanda, declined to say whether the MOF had intervened.
“We cannot comment now on whether or not we conducted an intervention,” Kanda, the vice finance minister for international affairs, told Reuters on Saturday, saying that this was a stance the MOF has stuck to over the past several weeks.
He added that the ministry wouldn’t confirm whether an intervention had taken place for a while yet, signaling possible “stealth intervention” to interact in a war of nerves against investors selling the yen.
The MOF also bought yen on Sept. 22, as investors focused on the widening divergence between the BOJ’s ultra-loose monetary policy and the U.S. Federal Reserve’s aggressive rate hikes.
Finance Minister Shunichi Suzuki and Kanda have repeatedly signaled the federal government’s readiness to intervene, warning against excessive volatility. Suzuki said before the intervention on Friday the authorities were able to act “strictly” against speculators.
Many market players doubt whether Tokyo can reverse the yen’s downtrend with solo intervention, even with Japan’s $1.33 trillion in foreign reserves.
The Group of Seven industrial powers agreed this month to closely monitor recent volatility but stopped in need of indicating they were prepared for joint intervention.
Japan bought a record 3.6 trillion yen ($24 billion) within the September motion, Tokyo money market brokerage firms estimated.
