Japan Foreign Reserves Fall For Third Month After Intervention

Foreign Reserves

Japan’s foreign reserves extended declines in October, following the previous month’s record drop, the Ministry of Finance said on Tuesday, reflecting the largest ever amount of yen-buying, dollar-selling interventionThe data comes alongside separate figures that confirmed Japan did not conduct stealth intervention in September and only entered the market to buy yen for U.S. dollars on Sept. 22 as announced, its first foray into the market to prop up the Japanese currency since 1998 Market players are scrutinising Japan’s vast pool of foreign assets and intervention records for clues on how much more Japan might be willing to spend in its forays into the currency market, though authorities remain tight-lipped on intervention. I wouldn’t be surprised if authorities conduct intervention one more time if dollar gains accelerate to hit new high beyond 152 yen,” said Tohru Sasaki, head of Japan Markets Research at JPMorgan Chase (NYSE:JPM) Bank.a

But I Don’t Think Japan Can Continue Large-Scale Intervention Selling U.S.

Treasuries to buy the yen indefinitely. There should be a limit given relations with its ally the United States.” Japanese officials have said they keep in close contact with U.S. counterparts, brushing aside speculation of U.S. opposition to dollar-selling intervention to weaken a currency while the United States is raising interest rates to battle inflation Japan’s foreign reserves fell for a third consecutive month to $1.19 trillion as at the end of October, still the world’s second-largest after China, the ministry said. The decline of $43.5 billion marked the second sharpest month-on-month on record.The currency intervention and rising foreign bond yields more than offset other factors that would support reserves, such as higher valuations of other foreign assets and income gains from foreign bond holdings, officials said. Graphic: Japan’s falling reserves -akpeqgwyepr/chart.png By asset type, foreign bonds – most of which are widely believed to be U.S. Treasuries, bought during bouts of dollar-buying intervention in the past when the yen was strong – account for four-fifths of the reserves.

Foreign Reserves

Of the Reserves, Foreign Bonds Fell The Most in September And Suffered The Second-Largest.

drop last month to $941 billion. Officials would not elaborate but market watchers interpret the drops as reflecting the sale of U.S. Treasuries for yen-buying intervention. Deposits – mostly parked at overseas central banks and the Bank for International Settlements, which make up some one-tenth of the reserves and can be readily converted into cash – grew for a second consecutive month to $137 billion in October. Separate data on intervention, which includes quarterly and daily totals, confirmed that authorities did not conduct stealth intervention in September, having spent 2.8 trillion yen that month to support the yen. Japan spent a record 6.35 trillion yen on intervention last month as the yen hit a 32-year low near 152 yen to the dollar. The yen has remained under pressure as the Bank of Japan remains committed to keeping ultra-low interest rates, in sharp contrast to aggressive rate hikes by the U.S. Federal Reserve.

Related Posts
Asian Stocks Hit By Tech Rout, More Fed Cues Awaited
Asian stocks

Most Asian stock markets sank on Wednesday tracking overnight losses on Wall Street, with technology-heavy indexes losing the most as Read more

Asian Stocks Muted Amid Fed Fears, China Buoyed By Stimulus Hopes
Asian stocks muted

Most Asian stocks kept to a tight range on Monday as markets awaited more cues on monetary policy from a Read more

Asia FX Rallies, Dollar Tumbles As Markets Bet on Fed Pivot
Asia FX

Most Asian currencies rose sharply on Thursday, while the dollar sank to a nine-month low even after the Federal Reserve Read more

Asia FX Treads Water As Fed Meeting Looms, Dollar Inches Higher
Asia FX

Most Asian currencies moved little on Wednesday in anticipation of a Federal Reserve meeting, while the dollar crept higher as Read more

0 0 votes
Article Rating
Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments
0
Would love your thoughts, please comment.x
()
x