Japan spent a record ¥6.35tn ($43bn) in October to prop up the yen in an increasingly intense battle to stem the currency’s decline to 32-year lows.
The government had already spent $20bn in September conducting Japan’s first yen-buying operation since 1998, but there had been no announced action since then.
Traders had speculated that Japan had carried out two more interventions this month, one on October 21 that analysts estimated cost ¥5.5tn and a smaller one on October 24. The intervention figure for September 29 to October 27 released by the finance ministry late on Monday did not disclose how many times the authorities had stepped in.
Analysts at Goldman Sachs said a third intervention might have been carried out on October 13. “We would not rule out the possibility of additional unannounced interventions being made after October 28,” they added.
The combined intervention amount in the past two months has reached ¥9.2tn, more than the total ¥4.2tn spent during the last phase of yen-buying operations in 1998.
Despite the repeated actions and verbal warnings by officials, the yen has continued to hover near the ¥150 level because of the widening gulf between the Bank of Japan’s ultra-loose monetary policy and the tightening by most other large central banks. On Monday, the yen traded at ¥148.71.
BoJ governor Haruhiko Kuroda last week suggested that the country was getting close to achieving its 2 per cent core consumer inflation target. But he again ruled out any early increase in interest rates until the rise in prices was matched by an increase in wages.
Masato Kanda, the country’s top currency official, recently suggested that the government, which has $1.3tn in foreign reserves, had a “limitless” amount of funds to conduct interventions, suggesting that authorities were ready to conduct more yen-buying operations.
But analysts have questioned the effectiveness of such unilateral actions, with some warning that further outsized operations risked stoking volatility.
With the BoJ unlikely to raise rates anytime soon, the focus remains on when the US Federal Reserve will shift towards smaller rate increases to stem inflation and gradually end the tightening. The US central bank is expected to boost its main interest rate by 0.75 percentage points when policymakers meet later this week.
“The extent to which higher rates [by the BoJ] would help the yen seems limited,” said Stefan Angrick, senior economist at Moody’s Analytics, adding that the currencies of other countries that had increased interest rates had also been knocked heavily this year.
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