BoJ data indicates Japanese government’s $35bn intervention to support yen

The Japanese government made a bold move on Monday, deploying approximately $35 billion to support the yen as it hit a 34-year low against the US dollar. The Bank of Japan released money market data on Tuesday evening, confirming suspicions that authorities had intervened in the market to stabilize the currency.

Traders and economists were not surprised by the intervention, as the yen had been sliding sharply due to signals from the US Federal Reserve and the Bank of Japan’s reluctance to raise interest rates. The government’s unease with the yen’s decline was evident, especially as Japanese households felt the impact of higher imported energy and food costs.

While the exact scale of the intervention won’t be confirmed until the end of the month, analysts believe that the significant amount spent on Monday’s intervention signals the government’s determination to prevent further depreciation of the yen. The move was not just about pushing the yen higher but also encouraging investors to reconsider their bearish bets against the currency.

Despite the intervention, the yen resumed its slide on Tuesday, highlighting the underlying factors contributing to its weakness. Traders noted that the government’s actions had set a clear tolerance level for the yen, potentially emboldening speculators to challenge the currency’s value once again.

Overall, the intervention sparked interest in the currency market, with some hedge funds already planning their next moves to capitalize on the yen’s fluctuations. The situation remains fluid, with the government keeping a close eye on the yen’s performance in the coming days.