Key Insights
- Japan spent 5.53 trillion yen ($36.8 billion) in July to support the weakening yen, marking its largest intervention since October 2022.
- The Bank of Japan raised its benchmark interest rate to “around 0.25%”, the highest level since 2008, in a significant shift from its previous near-zero policy.
TOKYO (MarketsXplora) – Japan’s government spent a staggering 5.53 trillion yen ($36.8 billion) to prop up the yen in July, according to official data released by the Ministry of Finance on Wednesday.
The intervention, covering the period from June 27 to July 29, comes in the wake of the yen’s plunge to a 38-year low against the U.S. dollar. This marks Japan’s most significant currency market intervention since October 2022, following a smaller round in late May.
The scale of the intervention aligns with market expectations and follows repeated warnings from Japanese authorities about their readiness to counter excessive currency volatility.
Coinciding with this revelation, the Bank of Japan (BOJ) announced a hike in its benchmark interest rate to “around 0.25%” from the previous range of 0% to 0.1%. This move, widely anticipated by analysts, represents the BOJ’s highest interest rate since 2008.
The yen responded positively to the BOJ’s decision, strengthening to around 150 per dollar. This marks a significant recovery from earlier in the month when the currency had weakened to 161.96 per dollar, a level not seen since December 1986.
Japan’s currency has faced persistent downward pressure since March when the BOJ ended its long-standing negative interest rate policy. The latest intervention and rate hike underscore the authorities’ determination to stabilize the yen and manage inflation expectations.
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