By Makiko Yamazaki
TOKYO, Aug 7 (Reuters) – Japanese authorities conducted a record single-day yen-buying intervention in foreign exchange markets in April, selling $40 billion of the country’s currency reserves, as they resumed massive yen-buying operations to stem the yen’s slide.
Market participants remain on high alert for further intervention as the yen is again edging lower past 158 per dollar, indicating persistent pressure on the Japanese currency as investors await U.S. employment data later in the day that could influence the Federal Reserve’s interest rate path.
Quarterly data from Japan’s Ministry of Finance (MOF) released on Friday showed authorities intervened on three days from April 30 through May 6, when market liquidity was thin due to Golden Week public holidays.
The largest operation amounted to 6.28 trillion yen ($39.64 billion) on April 30, surpassing the previous single-day record of 5.92 trillion yen set on April 29, 2024, showed MOF figures dating back to 1991.
The latest data provides a detailed daily breakdown of the previously disclosed record monthly intervention of 11.7 trillion yen conducted over April 28 through May 27.
The intervention helped lift the yen from a near two-year low of 160.725 per dollar to around 155 by May 6, but did not reverse the currency’s broader downtrend.
The yen resumed its downturn, sliding to 40-year lows below 163 per dollar in July, prompting Japan to intervene again last week, this time in coordination with the U.S.
Central bank data indicated Japan may have spent as much as $58.97 billion on July 30 and $36.58 billion on the following day in potentially the largest-ever yen-buying intervention. The MOF will release official records on August 28.
To soothe market concern about the limits of Japan’s capacity for large-scale intervention, Tokyo and Washington have said Japan could utilise a COVID-19 era Federal Reserve backstop for major central banks.
The Fed facility, introduced in 2020 to steady markets during the pandemic, allows Japan to raise dollar liquidity without outright sales of U.S. Treasuries, potentially easing funding pressure on Tokyo for intervention.
Federal Reserve data showed that no repurchase agreements were executed under foreign official accounts in the week through August 5, indicating that Japan did not tap the facility in its latest yen-buying operation.
In the coordinated intervention, the U.S. Treasury sold euros to buy yen.
The European Central Bank (ECB) was made aware of that U.S. intervention last week after the trade, the Financial Times reported on Thursday.
Some senior ECB officials viewed the U.S. decision to use euros in its trade as an unprecedented breach of longstanding conventions on co-operation between Western monetary authorities, FT said, citing people familiar with the matter.
A Treasury spokesman confirmed the reallocation of reserve assets, the FT reported.
($1 = 158.2600 yen)
(Reporting by Makiko Yamazaki; Editing by Chang-Ran Kim and Christopher Cushing)
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