Japan spent record ¥9.8 tril in April-May to slow currency fall

Japan spent 9.79 trillion yen between April and May, a monthly record, to slow the yen's rapid fall against the U.S. dollar, government data showed Friday, confirming market views that Japanese authorities intervened in the currency market.

The amount compares with nearly 9.2 trillion yen Japan spent on multiple yen-buying, dollar-selling operations between September and October of 2022.

When the yen suddenly spiked versus the dollar in late April and early May, Japanese authorities kept traders guessing whether they had stepped in, a tactic known as stealth intervention.

The latest data for April 26 through Wednesday does not include daily breakdowns, which will be released later.

Japanese authorities have maintained that they would take "appropriate" action against excessive volatility in the foreign exchange market, emphasizing that currency moves should be stable and reflect economic fundamentals.

Market speculation over intervention grew after the dollar tumbled by around 5 yen, from a 34-year high of 160 yen to the 154 yen zone in a short span of time on April 29, a national holiday in Japan.

The U.S. currency also fell about 4 yen in roughly an hour, from 157 yen to 153 yen, after the U.S. Federal Reserve stood pat on monetary policy on May 1.

Analysts have said any impact of market intervention would be short-lived. The dollar was trading in the lower 157 yen zone on Friday as the official data came out.

Based on data from the Bank of Japan and market sources, the total size of Japan's yen-buying, dollar-selling operations had earlier been estimated at over 8 trillion yen.

The yen's persistent weakness has raised concern about its negative impact on the Japanese economy, inflating import costs for the resource-scarce nation.

The BOJ's first interest rate hike in 17 years in March has failed to reverse the trend, with the interest rate gap between Japan and the United States remaining wide. The yen is also weak against the euro after the European Central Bank raised rates to curb inflation.