Japan Data Confirms First Currency Intervention Since 2022 -- Update

By Megumi Fujikawa

TOKYO--Japan spent nearly 9.8 trillion yen on currency intervention the past month, the Ministry of Finance said Friday, confirming it stepped into the foreign exchange market for the first time since 2022.

The ministry's data showed that Japan spent 9.789 trillion yen ($62.42 billion) on currency intervention between April 26 and May 29. The latest intervention was larger than about Y9.2 trillion that Japan spent for its yen-buying operations in September and October 2022.

This year's intervention came as the yen plunged to a three-decade low in late April, falling to around 160 to the dollar. The yen later jumped suddenly, prompting speculation of intervention by the Japanese government.

The wide gap in interest rates between Japan and the U.S. has led to the weakening of the yen in recent years. An extended run of dollar strength has weighed heavily on currencies across Asia, prompting concerns from officials about depreciation risks.

Earlier Friday, Finance Minister Shunichi Suzuki reiterated the importance of stability in foreign-exchange rates. "We are carefully watching movements in the market. There is no change to our basic stance that we will take appropriate action against excessive moves," he said.

The yen is changing hands around 157.25 against the dollar Friday.

Japanese government bond yields have been gradually rising since the Bank of Japan decided to end negative interest rates and abandon its control over bond yields in March. The yield on 10-year JGBs rose to 1.1% Thursday, its highest level since July 2011.

Bank of America strategist Shusuke Yamada said the rise in JGB yields won't be a supporting factor for the yen unless the 10-year yield reaches around 1.25%. The 10-year JGB yield stood at 1.0 7% late Friday afternoon in Tokyo.

Japan still has the ability to defend the yen for now, with ample dollar-denominated assets in its reserves, Yamada said.

"[A] risk scenario where the MOF's credibility is tested is if the Fed has to hike again," triggering further rises in U.S. Treasury yields, he added.

Write to Megumi Fujikawa at [e-mail]

(END) Dow Jones Newswires

05-31-24 0713ET