Foreign exchange reserves decreased by 7 trillion yen, the rate of decline is the second largest - largest yen purchase intervention ever
1.231.6 billion dollars, down 3.7% from the previous month, and the rate of decline in securities was 5.2%, the largest ever
The finance minister refrains from commenting on the sale of US bonds, saying “it will affect the market”
Japan's foreign exchange reserves, which are the source of exchange intervention, decreased by about 7 trillion yen from the previous month as of the end of May. The rate of decline was the second largest after September 2022, when the first yen purchase intervention in 24 years was passed. The reason was the largest yen buying intervention ever carried out by the government and the Bank of Japan.
The Ministry of Finance announced it on the 7th“Status of foreign exchange reserves, etc.”According to the report, foreign exchange reserves at the end of May decreased by 47.4 billion dollars (about 7.38 trillion yen) from the end of the previous month to 1.231.6 billion dollars. The rate of decline was 3.7%. Of these, securities fell 5.2% to 927.6 billion dollars, the biggest rate of decline. Deposits rose 0.8% to $159 billion.
Finance Minister Suzuki Shunichi explained at the post-cabinet meeting that “the decline due to exchange intervention is reflected” in foreign exchange reserves. In response to the question of whether it was an intervention in the form of selling US bonds, he said, “It will also have an impact on the market, so I would like to refrain from commenting.” Meanwhile, he said that he did not think that foreign exchange reserves would be a constraint on exchange intervention.
Finance Minister Suzuki: Decline due to exchange intervention is reflected - decrease in foreign exchange reserves
Senior economist Ueno Tsuyoshi of Nissay Research Institute pointed out that “there is a part where the rise in market prices due to the appreciation of the euro, the decline in US interest rates, and the rise in gold prices was offset” as to the background where the reduction amount fell below the intervention amount. When deposits decrease, it is deemed that there is little room for intervention, and since they could be sold in yen, the Ministry of Finance expressed the view that “they may have dared to reduce securities.”
Changes in foreign exchange reserves
Source: Ministry of Finance (status of foreign exchange reserves, etc.)
The Ministry of Finance did not specify whether securities were sold during the intervention. It is said that details of individual transactions will not be disclosed as it would lead to market speculation.
According to exchange intervention results announced at the end of May, the government and the Bank of Japan carried out interventions totaling 9.788.5 billion yen from 4/26 to 5/29. It seems that yen buying intervention was carried out on 4/29, when the yen plummeted to the low level of 1 dollar = 160 yen for the first time in 34 years, and 5/2, when it fell again to the 157 yen level, and it exceeded 22/10 (6.349.9 billion yen), which was the largest monthly intervention amount until now.
When the yen purchase intervention was implemented from September to October '22, foreign exchange reserves at the end of September were down 4.2% from the end of the previous month. The Ministry of Finance explained that in addition to exchange intervention, a decrease in the valuation value of foreign bonds due to rising interest rates had an effect. There was also a view in the market that there was no denying the possibility that US bonds were used for intervention. Meanwhile, deposits in both months increased from the end of the previous month.
The finance minister refrains from commenting on the sale of US bonds, saying “it will affect the market”
Japan's foreign exchange reserves, which are the source of exchange intervention, decreased by about 7 trillion yen from the previous month as of the end of May. The rate of decline was the second largest after September 2022, when the first yen purchase intervention in 24 years was passed. The reason was the largest yen buying intervention ever carried out by the government and the Bank of Japan.
The Ministry of Finance announced it on the 7th“Status of foreign exchange reserves, etc.”According to the report, foreign exchange reserves at the end of May decreased by 47.4 billion dollars (about 7.38 trillion yen) from the end of the previous month to 1.231.6 billion dollars. The rate of decline was 3.7%. Of these, securities fell 5.2% to 927.6 billion dollars, the biggest rate of decline. Deposits rose 0.8% to $159 billion.
Finance Minister Suzuki Shunichi explained at the post-cabinet meeting that “the decline due to exchange intervention is reflected” in foreign exchange reserves. In response to the question of whether it was an intervention in the form of selling US bonds, he said, “It will also have an impact on the market, so I would like to refrain from commenting.” Meanwhile, he said that he did not think that foreign exchange reserves would be a constraint on exchange intervention.
Finance Minister Suzuki: Decline due to exchange intervention is reflected - decrease in foreign exchange reserves
Senior economist Ueno Tsuyoshi of Nissay Research Institute pointed out that “there is a part where the rise in market prices due to the appreciation of the euro, the decline in US interest rates, and the rise in gold prices was offset” as to the background where the reduction amount fell below the intervention amount. When deposits decrease, it is deemed that there is little room for intervention, and since they could be sold in yen, the Ministry of Finance expressed the view that “they may have dared to reduce securities.”
Changes in foreign exchange reserves
Source: Ministry of Finance (status of foreign exchange reserves, etc.)
The Ministry of Finance did not specify whether securities were sold during the intervention. It is said that details of individual transactions will not be disclosed as it would lead to market speculation.
According to exchange intervention results announced at the end of May, the government and the Bank of Japan carried out interventions totaling 9.788.5 billion yen from 4/26 to 5/29. It seems that yen buying intervention was carried out on 4/29, when the yen plummeted to the low level of 1 dollar = 160 yen for the first time in 34 years, and 5/2, when it fell again to the 157 yen level, and it exceeded 22/10 (6.349.9 billion yen), which was the largest monthly intervention amount until now.
When the yen purchase intervention was implemented from September to October '22, foreign exchange reserves at the end of September were down 4.2% from the end of the previous month. The Ministry of Finance explained that in addition to exchange intervention, a decrease in the valuation value of foreign bonds due to rising interest rates had an effect. There was also a view in the market that there was no denying the possibility that US bonds were used for intervention. Meanwhile, deposits in both months increased from the end of the previous month.
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