Japan's Latest FX Intervention Spends Over 11 Trillion Yen, Approaching Record Scale

On Monday evening (3rd), according to monetary market data from the Bank of Japan, the foreign exchange intervention conducted last Thursday and Friday may have involved more than 11 trillion yen in funds.

Background: During the April to May intervention phase, Japan deployed nearly 11.73 trillion yen (approximately 73.6 billion USD), setting a new record for the largest single-month FX intervention in Japanese history.

The Bank of Japan's latest data shows that due to government transactions on last Friday, the financial system will face a liquidity outflow of 11.4 trillion yen on Tuesday. Financial transactions typically settle two business days later. Currency brokers had previously expected an outflow of around 6 trillion yen; the additional 5 trillion yen likely represents the scale of Japan's FX intervention.

Earlier estimates suggest Japanese authorities may have used dollars to purchase 6 to 7 trillion yen last Thursday. This implies the current round of FX intervention could approach or even surpass the record set three months ago.

On Monday morning, Finance Minister Shunichi Suzuki confirmed that Japan and the United States jointly intervened in the FX market last Friday to address the yen’s recent “excessive volatility and disorderly movements.” She stated that further action would be taken “without hesitation.”

U.S. Treasury Secretary Bessent also confirmed the action on social media, stating, “The United States will not hesitate to participate in further joint interventions.”

As a short-term effect of this intervention, the yen strengthened from a low of 164 per dollar last Thursday to as high as 155.2 per dollar during Monday’s early trading.

Notably, during the April–May intervention, the yen also briefly surged from 160 to the 155 range. However, due to structural weaknesses in the Japanese currency—such as the Japan-U.S. interest rate differential, rising oil prices, and expectations of U.S. Federal Reserve rate hikes—the impact of spending over 70 billion USD lasted only slightly over a month.

Given that these yen-weakening factors remain in place, even with the rare U.S. participation in joint intervention, the sustainability of the yen’s appreciation faces significant uncertainty.