Japan May Have Spent Approximately $34.5 Billion to Intervene in Yen Exchange Rate

On May 1, reports indicate that Japan may have utilized around $34.5 billion for its first currency intervention since July 2024 to support the yen. An analysis comparing the Bank of Japan’s accounts with forecasts from currency brokers suggests that the intervention size could be approximately 5.4 trillion yen. In 2024, Japanese authorities intervened four times to support the yen, averaging about 3.8 trillion yen each time. On Thursday evening, Japan’s Finance Minister Shunichi Suzuki warned that ‘decisive action’ was imminent, leading to a significant appreciation of the yen. Subsequently, a source revealed that authorities had entered the market. Data released by the central bank on Friday indicated that, due to fiscal factors, its current account is expected to decrease by 9.48 trillion yen next Thursday (the first business day after the Golden Week holiday). This decline is much larger than the approximately 4.08 trillion yen forecasted by currency brokers such as Tokyo Short Funds, Central Short Funds, and Ueda Yagi Short Funds. This marks the first currency intervention since Suzuki took office, and the market generally views its initial effects as significant, driving the yen’s appreciation by over 3%. However, this battle is far from over. Suzuki also cautioned traders to remain vigilant, stating on Thursday that during the five-day Golden Week, they should not let down their guard.