Japan’s monetary authorities endeavor to rescue the national currency. Remarkably, the Bank of Japan finds it appropriate to avoid pompous statements and verbal interventions. Last month, humongous funds worth billions of dollars were allocated to intervene in Forex. However, the fact has come to light not until recently. The authorities did not announce any interventions in advance but quietly bought the yen to stabilize the domestic economy.
Japan’s finance department spent an incredible $42.2 billion on forex interventions in October. The government and the central bank did not aim to impress citizens but took drastic measures secretly. The forex interventions were meant to prop up the yen’s rapid slide against the US dollar. The Japanese currency briefly slumped to 152 against the US dollar last month. Technical charts show that the measures have achieved the goal: the yen has strengthened since then, trading now at about 147 against the US dollar.
Japan’s monetary authorities are unwilling to inject huge funds into the currency market frequently, analysts pinpoint the essence of the ongoing strategy. The cornerstone is to enter the FX market at the right moment when forex interventions can exert the most influence. “Japan should still have more than 10 trillion yen left in cash, so big interventions at the level we’ve seen in September and October could happen maybe another three to five times,” analyst Atsushi Takeda at Itochu Research Institute commented on the emergency moves.
