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Japan confirms first monetary intervention since 2022

by SuperiorInvest

New Japanese 1,000 yen bill displayed inside the Currency Museum of the Institute of Monetary and Economic Studies of the Bank of Japan. The new banknotes will begin to circulate from July 3, 2024.

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Data from Japan's Finance Ministry on Friday confirmed the country's first monetary intervention since 2022, after the and in fell to its lowest level in 34 years in April.

The ministry stated on Friday that Japan spent 9.7885 trillion yen ($62.25 billion) on currency intervention between April 26 and May 29, according to a statement translated by Google.

This is the first time the Japanese government has taken such a market measure since October 2022, according to ministry records.

The timing of the government's move coincides with a strong rally in the Japanese currency in recent weeks, after the yen fell to a 34-year low of 160.03 against the US dollar on April 29.

It later rebounded to 156 levels later in that session, stoking speculation about possible intervention by Japanese authorities. The currency further strengthened by over 2% in a matter of days.

At the time, analysts at Bank of America Global Research estimated that the size of the first suspicious intervention could have been between 5 and 6 trillion yen, according to data from the Bank of Japan.

The yen has been fighting sustained pressure since the Bank of Japan ended its negative interest rate monetary policy in March. It was trading at 157.25 against the US dollar at 11:55 am London time on Friday.

Earlier this month, Japanese Finance Minister Shunichi Suzuki backed the need for interventions if strong currency movements began to hit households and businesses. He declined to comment when asked if the ministry had intervened to shore up the yen.

“When there is excessive movement, it may need to be smoothed out,” Suzuki told CNBC's Dan Murphy on May 3, according to a translation.

Japan last intervened to stabilize the currency in October 2022, when the yen fell to lows of around 152 per dollar. Authorities intervened three times that year to stabilize the currency and reportedly spent up to 9.2 trillion yen during the period.

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