Japan says 3-day yen intervention lifted yen in summer

Japan intervened in the currency market three times during the summer to bolster the yen, marking its largest monthly spending on yen-buying intervention at a total of 15.4 trillion yen. The data revealing three days of intervention surprised traders, who had assumed it occurred over two days. Tokyo acquired a record-breaking 7.98 trillion yen (USD 50.4 billion) on July 30 and additional 5.55 trillion yen and 1.87 trillion yen on the following days, according to data released by the Finance Ministry on November 9.

The intervention period marked Japan's first coordinated operation with the US since 1998, aimed at countering disorderly currency movements. US Treasury Secretary Scott Bessent and Finance Minister Satsuki Katayama emphasized the intervention's objective and readiness to act again if necessary. The joint intervention led some market participants to believe the yen's prolonged weakness might have ended, and Japan's currency eventually strengthened to 152.89 per dollar in early September before regaining some gains.

It was trading around 158.30 per dollar Monday morning in Tokyo. Japan acted alone on July 30, a day before a Bank of Japan policy decision, indicating a departure from recent practices. Previous interventions typically followed Bank of Japan decisions or major economic data releases. To finance the summer interventions, Japan likely sold some of its foreign securities, including US Treasuries, earlier data suggested.

Japan's foreign securities holdings stood at USD 835 billion at the end of October, an increase from the previous month. The joint intervention also revealed Japan's capability to tap the Federal Reserve's Foreign and International Monetary Authorities Repo Facility for dollar liquidity without selling Treasuries outright, challenging the notion that Bessent's opposition hindered Japan's intervention capabilities.

The three-day intervention occurred less than three months after the Golden Week operations, when authorities spent a record amount to support the yen. Currency weakness persisted due to growing speculation about widening interest-rate gaps between Japan and the US. Japan and the US have repeatedly warned speculators since the joint intervention.

Katayama has insisted that authorities' stance remains unchanged and that they are prepared to take bold action if necessary. US President Donald Trump and Prime Minister Sanae Takaichi expressed concerns over yen weakness during their September summit, signaling resistance to further depreciation.