By Kevin Buckland
TOKYO (Reuters) – Japanese authorities spent 5.53 trillion yen ($36.8 billion) this month on currency market interventions to lift the yen from a 38-year low, official data showed on Wednesday.
The Finance Ministry’s figures confirmed traders’ and analysts’ suspicions after sharp spikes in the yen on July 11 and 12 that money market estimates put it at 5.71 trillion yen.
During the two days from July 11, the yen shot from as low as 161.76 per dollar to as high as 157.30.
Wednesday’s data only shows a total for the period June 27 through July 29. A daily breakdown will be available in quarterly data in about three months.
The Treasury Department’s latest effort differed from other recent rounds of intervention — including the record 9.79 trillion yen intervention in late April and early May — because officials bought the yen when the dollar was already tumbling due to surprisingly weak U.S. consumer inflation.
Still, analysts pointed to factors other than the dollar selling in Tokyo that kept the yen rising during the month.
The dollar took another step lower after Republican presidential candidate Donald Trump said he wanted a weaker currency. That was quickly followed by a host of leading Japanese politicians, including the prime minister, pushing for short-term interest rate hikes from the Bank of Japan to curb yen weakness.
The BOJ’s decision to raise rates earlier Wednesday and Governor Kazuo Ueda’s subsequent aggressive press conference sent the dollar spiraling toward the 150 yen high. It was 150.37 yen as of 1039 GMT.
“I’m not saying the intervention had no impact. That was true. But if Trump and the others hadn’t come out and said what they did, we probably would have gone back to about 160,” Shoki Omori said. chief Japan strategist at Mizuho Securities.
Despite rising expectations for further normalization of BOJ policy, Omori expects the yen to weaken again during August.
“A rate hike of just 25 basis points does not necessarily reduce the attractiveness of carry trades,” he said, referring to a practice in which market participants borrow yen at near-zero Japanese interest rates and invest it in higher-yielding assets abroad, including the United States. States. States.
Japanese authorities have made a habit of not confirming intervention, while consistently warning that they are ready to act at any time to counter unilateral, speculative currency moves.
Tokyo still has plenty of firepower to spring into action again, with foreign reserves standing at as much as $1.23 trillion at the end of June. A weak yen remains unpopular with the public and could play a prominent role in the ruling party’s leadership elections in September.
Under new leadership, however, further intervention would take place, with Masato Kanda’s stint as Japan’s top currency diplomat set to end on Tuesday. Financial regulation expert Atsushi Mimura took over as Deputy Finance Minister for International Affairs and said in an interview that intervention remains on the table.
($1 = 150.4200 yen)
