▲ Japanese Yen
Japanese authorities are estimated to have intervened in the market with a total of 13.78 trillion yen, equivalent to about 126 trillion won, over two days on the 30th and 31st of last month to defend the yen, Bloomberg reported.
Based on an analysis of Bank of Japan accounts, the report estimated that Japanese authorities injected 8.45 trillion yen (75.5 trillion won) on the 30th of last month.
If confirmed, this would mark Japan's largest-ever daily market intervention.
The yen surged by as much as 3.3% against the dollar in the New York market that day, hitting 157.98 yen.
This marks the largest intraday gain since December 2023.
The sharp surge in the yen came around the same time the South Korean won strengthened by 2% to reach a nine-month high.
The won-dollar exchange rate plunged starting around 10:20 p.m. on the 30th, dropping to 1,419.0 won around 10:44 p.m.
It hit a low of 1,418.0 won around 6:00 a.m. on the 31st.
This was the lowest level in nine months since October 20 of last year.
These movements fueled speculation in the market that South Korea and Japan had coordinated their efforts.
Japan additionally injected another 5.33 trillion yen (approximately 48.6 trillion won) the next day, the 31st.
Finance Minister Satsuki Katayama officially confirmed that Japan intervened in the market that day.
Combined for the two days, this sets a new monthly record, surpassing the 11.73 trillion yen intervention record set during the Golden Week holiday period last April.
Yukiaki Shibayama, deputy general manager at Japanese short-term money broker Central Tanshi, said, "It is almost certain that Japan carried out an intervention in the scale of 5 trillion to 6 trillion yen."
The United States also joined in the coordination.
Japanese Finance Minister Satsuki Katayama announced through a statement that the U.S. and Japanese governments jointly conducted yen-buying interventions on the 31st of last month.
U.S. Treasury Secretary Scott Bessent also officially confirmed this in a social media statement.
Secretary Bessent stated that the U.S. would not hesitate to intervene in the market again, and President Donald Trump expressed support, describing the intervention as a "signal of friendship."
Bloomberg evaluated this as a sign of the closest U.S.-Japan monetary policy coordination in 15 years.
However, the Financial Times pointed out in a column on the 3rd that the scale of currencies actually purchased by the U.S. may be much smaller than its symbolic impact.
As of the end of March, the U.S. Treasury's Exchange Stabilization Fund (ESF) and the Federal Reserve's System Open Market Account (SOMA) held foreign exchange assets of 19.1 billion dollars (approx. 27.3 trillion won) each, meaning that even if both accounts sold all of their holdings in euros, the scale of market intervention would be around 26.3 billion dollars at most—only half of Japanese authorities' daily intervention scale of 52.8 billion dollars.
The Financial Times added, however, that the situation could differ if the U.S. traded via currency futures rather than spot transactions.
Under the U.S. Gold Reserve Act, the Treasury Secretary is required to submit the ESF financial statements to Congress within 30 days from the end of each month, and the actual scale of U.S. intervention is expected to be revealed around the end of this month.
Before the intervention, the yen approached 164 yen per dollar, sliding to its lowest level since 1986, but it later turned strong and traded in the upper 156-yen range in the Tokyo market on the evening of the 3rd.
With the Bank of Japan's current account balance forecast for the 4th, released the same day, projected to drop by a larger-than-expected margin (11.4 trillion yen), observations are emerging that the possibility of an additional (third) intervention cannot be ruled out.
Expectations are also growing in the market that the Bank of Japan could raise its benchmark interest rate as early as September.
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