Japan likely spent some ¥3 tril on intervention as yen jumps

The jump from nearly 162 to 157 seemed far too great without intervention.

Like many others, I immediately suspected the credibility of the cause presented in yesterday’s Kyodo News report on this Japan Today website. 

Quote from that report: “The U.S. dollar fell sharply against the yen after data showing a lower-than-expected U.S. consumer price index fueled hopes for early rate cuts by the Federal Reserve.” 

Now we know that this supposed cause was completely bogus.

Japan likely spent some 3 tril. yen on intervention as yen jumps

3 Tril yen that Japan expect taxpayer will pay for that.

3 Tril yen that Japan expect taxpayer will pay for that.

They should use the term "exchange." The taxpayers have lost no money - it's just that the BOJ has a portion of its reserves in a different currency.

Another 30,000 yen spent PER taxpayer. On top of the last 2-3 unsuccessful interventions which were much larger. Just give each taxpayer the 200,000 yen so we can fight inflation and the weak yen as WE see fit. On energy, food and other items that are NOT included in the CPI stats!

And a a few weeks or so and it will be right back where it was or even lower.

Another 30,000 yen spent PER taxpayer.

its unlikely you’re not a mathematician I know, but if you think about the cost of living and how bad that has become, and would become with a yen worth half as much as it was a year ago, it’s a bargain?

"I do not comment on whether we have intervened or not," Finance Minister Shunichi Suzuki told a press conference.

But if you or any of your cronies made personal gains from the alleged intervention, that’s insider trading

i just read these articles for the economic gibberish.

Whoever wrote this article should learn a few basics. In this case, the BoJ was intervening by selling dollars, they weren't selling yen. The dollars they were selling were bought at much better levels when the yen was strong, and in the interim were held as Treasuries offering yields higher than those on JGBs. The result is a huge profit for taxpayers.

This tactic of waiting for news that pushes the exchange rate in the direction the authorities want, then intervening to exaggerate the move, is a common one.

Every intervention sees additional weakening. Here comes 172

リッチToday  09:11 am JST

Every intervention sees additional weakening. Here comes 172

Fingers crossed!

yen moves should be stable, reflecting economic fundamentals.

its the exact opposite whenever these people cause the yen to temporarily spike higher, flying in the face of the economic fundamentals

Good job, guys. It'll probably be right back where it was in two weeks.

I've just been buying it up. I have to, or rather get to, bring my family to Japan for 2 weeks every year, so this exchange rate has been very helpful. I've got enough Japanese cash for 5 trips to Japan in my safe at home now. Still, for the past couple years we've been using credit cards while there because of the exchange rate.

I really feel bad for the Americans who earn their pay in yen as I once did, many of them underpaid in Japan as it is, hoping to save for their eventual return back home. It's also prevented Japanese family members from visiting us in recent years.

Japan spent 9.79 trillion yen between April and May in its previous bid to shore up the yen, after it fell to 160.24 on April 29. The Finance Ministry has yet to reveal exactly how much of the total it spent on what date.

The answer to the yen being in tatters is not intervention but real trade and economics.

If you talk to the Japanese business world, China is the answer and there are interesting developments. If you talk to the non-business world, especially those with humanity degrees, then it's spying, stealing, kidnapping, genocide, South China Seas, Hong Kong, Taiwan, Tibet, Xinjiang, Russia and so on.

One way to tell if anyone is making money in China is by the topic of conversation. China just broke the record for biggest trade surplus in June $99 billion.

The economic illiteracy in the comments and even article itself are mindboggling. The BOJ is not SPENDING yen to "prop up" the currency. The BOJ is profiting tremendously off of every single intervention. Japan has massive reserves of US dollars (called foreign reserves) that it bought when they dollar was dirt cheap relative to the yen at 80-90 yen per dollar.

The BOJ is now selling those dollars for yen at 160 yen, almost twice the price. It's no different than any other commodity -- buy low, sell high. They are packing tons of yen into Japan's treasury, which Japan will then be able to use on domestic spending and paying off its debt. The exchange rate will improve for the yen once the U.S. Fed cuts rates and/or the BOJ raises rates, but the latter is relatively unlikely and the former is guaranteed eventually. The same dynamic applies to the euro.

The article also says "Market analysts said the yen's rapid appreciation came as market players flocked to the currency as the U.S.-Japan interest rate differential narrowed following the release of the inflation data." This is wrong; the shifts in the yen are based on speculation about interest rate changes in the future. Lower than expected U.S. inflation means there's a higher than expected chance of the Fed lowering U.S. interest rates, which would lower the differential.

Can the Japan Today reporter and higher a finance expert to write articles that don't embarrass the site.

@Dingleheimer On the contrary, being paid in USD and living in Japan is the dream right now. Similarly, being paid by foreign buyers of Japanese goods is also good for our pocketbooks. Japan is cheap so foreign demand is high, and Japanese companies are making record profits. We don't pay American prices like you do -- the great American delicacy Big Mac is just $3.04 here even at its most expensive (cities). That's half the price of a Big Mac in Massachusetts. The average U.S. price is $5.29. That's 75% more! Japanese prices are just 52% what you pay.

There are also countless ways to profit off of these economic shifts, as you can invest in USD, let the yen slide, then trade back into yen just like the BOJ is doing for big profits in this article. You can also use Japan's tax-free investment accounts to invest overseas for a similar type of gain.

The people who are really being punished are salaried workers being paid in fixed values of yen without much-promised wage hikes. However, core inflation in Japan is low and there are government payments helping out with food/energy cost spikes. Rent remains extremely low. How's the rent in the U.S.? How's your core inflation? Think about it; it's not so bad in Japan.

@Asiaman7 's comment is also wrong.  “The U.S. dollar fell sharply against the yen after data showing a lower-than-expected U.S. consumer price index fueled hopes for early rate cuts by the Federal Reserve.” This is correct; it's just not the whole story. Almost every sudden shift in exchange rates is tied to the release of some new report or other news. Lower-than-expected inflation will always cause the dollar to weaken and the yen to strengthen in the current context. That has been happening all year every time there's a report released. You just haven't been paying attention, I guess.d

The reason the report (always!!) affects exchange rates is that low inflation in the U.S. mean it's likely the U.S. "Lower than expected" is based on the concept that exchange rates have already factored in expectations, so if the data proves reality is different than expected, that will cause a change in price. If inflation is low in the U.S., the Fed will lower rates, which will inevitably change exchange rates so the yen is stronger. This will 100% happen eventually.

Save all that intervention money. Use it to militarized instead. Then provoke a war in Asia. That will surely get the yen back to 100.

quercetumToday 11:56 am JST

If you talk to the Japanese business world, China is the answer

Another laughable generalization to push your pro-CCP agenda. At least you're keeping us all entertained.

The reality is that whilst some in the Japanese business world still continue to value links with China, many others are heading to SE Asia, India, or elsewhere, due to China's rising costs, rapidly deteriorating business climate under Xi, and the distinct possibility of Xi starting a war and totally ruining their business. No "humanity degrees" needed: just common sense and basic Business Continuity Planning.

Asserting that "China is the answer" for "the Japanese business world" is clearly nonsense.

The major factor behind the feeble yen is the wide interest rate differential between Japan on one hand and the United States and Europe on the other.

And with a rate cut extremely likely in September, we should see a stronger yen. Which is great for those of us long suffering yen earners.

We want our buying power back.

Japan is a nation destroying itself to keep up with the rest of the world. You can only run and hide for so long. Face the facts, there are many players in Asia now Kicking butt on this tiny island nation.

The jig is up. The Yen will soon be trading at 180 to the US dollar, wait and see.

It appears to me that on Friday the yen strengthened twice. After the first drop I read a story about how Japan had intervened - they said there was an anonymous source. But then the yen dropped again overnight. I’m wondering if they were both interventions or if the first drop was only due to the CPI report and maybe the second drop was only due to a rate check, which would mean no intervention at all.

Time will tell but either way I’m happy to see it strengthen.

suejak,

The economic illiteracy in the comments and even article itself are mindboggling.

That’s true from everyone’s perspective:)

The BOJ is not SPENDING yen to "prop up" the currency. The BOJ is profiting tremendously off of every single intervention.

This is a dubious statement.

Consider that when the MoF had the BOJ intervene similarly in 2022 to sell dollar reserves for yen, the USD/JPY rate was at around 150.

Now it’s at 157.

So if those dollars had been held on to, rather than converted to yen, they would be worth more now. I won’t do the math but it would be a whole lot of money in yen terms.

This is not to mention any yield that would have been had from those dollars during the interim.

However, the MoF with BOJ is not doing this to make profits anyway.

Japan has massive reserves of US dollars (called foreign reserves) that it bought when they dollar was dirt cheap

Above you said that the BOJ is not “spending” the dollars, but here you claim that the dollars being sold were “bought” to begin with. That’s inconsistent isn’t it.

The BOJ is now selling those dollars for yen at 160 yen, almost twice the price.

Would be better to sell them when the rate is 200 or 400 yen to the dollar, just as selling them now is better than selling them when it was 150.

It's no different than any other commodity -- buy low, sell high.

They are not trading forex here though. It’s not as if they will be paying tax on what you claim are profits, since that’s not what is actually going on.

They are packing tons of yen into Japan's treasury,

How so?

which Japan will then be able to use on domestic spending and paying off its debt.

Selling dollars and paying down debt could be agreeable, but I’m sure that this intervention doesn’t mean a thing for domestic government spending or debt repayment.

The exchange rate will improve for the yen once the U.S. Fed cuts rates and/or the BOJ raises rates, but the latter is relatively unlikely and the former is guaranteed eventually. The same dynamic applies to the euro.

That’s what some pundits were saying at the start of the year when the rate was circa 140, as I recall. Even if the FOMC does cut rates a bit there will still be a big gap between the yen and dollar etc, and the policy approach here is brain dead so any temporary strength in the yen will be a welcome opportunity to sell more, for me.

The article also says "Market analysts said the yen's rapid appreciation came as market players flocked to the currency as the U.S.-Japan interest rate differential narrowed following the release of the inflation data." This is wrong; the shifts in the yen are based on speculation about interest rate changes in the future. Lower than expected U.S. inflation means there's a higher than expected chance of the Fed lowering U.S. interest rates, which would lower the differential. 

Well, it was wrong but not for that reason I’d say - the appreciation came because the BOJ sold a craptonne of dollars for yen.

Can the Japan Today reporter and higher a finance expert to write articles that don't embarrass the site.

I think the article was fine… and there are plenty of finance experts in the comments to make up for any deficiencies in the reporting.

And with a rate cut extremely likely in September, we should see a stronger yen. Which is great for those of us long suffering yen earners.

Stronger relative to when, though?

The yen was worth 140 to start the year. Praise the lord if we are mercifully able to get back there again without a nasty financial markets shock of some sort.

If the BOJ continues to buy JGBs and even hikes its short term policy rate to 0.5%, and the FOMC cuts its to say 4.0%, I will still be selling my yen for dollars. Heck, even my Turkish lira have performed better than the yen this year, which shows just how ridiculous things are.

Time will tell but either way I’m happy to see it strengthen.

It’s probably a temporary reprieve, unfortunately.

I’d rather see some better policies in Japan to help to actually turn the ship around properly.

Number one - adopt a “strong currency” policy.

Number two - slash low priority spending to clamp down on the endless decades of deficit spending that forces the BOJ to keep printing money

… well there’s more but those two things would be a fine start. Hopefully Kishida’s successor won’t be another brain dead politician of the same school.

Another article on how the BOJ is actually profiting tremendously (good for Japan!) on these interventions: https://www.bloomberg.com/news/articles/2024-05-01/huge-fx-gains-are-japan-s-benefit-from-intervention-setser-says

Please read these articles and understand before fanning the flames of ignorance.

Recent Japanese society where barren conflict among generation around social security have been instigated politically, on the other hand, state institutes are spending huge taxpayers money.

Now I have a clearer picture of intervention levels I’m thankful that I refrained from a major trade.

Look forward to profiting off the next plunge in the yen!

If you talk to the Japanese business world, China is the answer

Another laughable generalization to push your pro-CCP agenda. At least you're keeping us all entertained.

The reality is that whilst some in the Japanese business world still continue to value links with China, many others are heading to SE Asia, India, or elsewhere, due to China's rising costs, rapidly deteriorating business climate under Xi, and the distinct possibility of Xi starting a war and totally ruining their business. No "humanity degrees" needed: just common sense and basic Business Continuity Planning.

Asserting that "China is the answer" for "the Japanese business world" is clearly nonsense.

Yep, "China is the answer" was the answer everyone gave in the 1990s. That's why every manufacturer moved to China then

And a couple decades on, look where they are now - they're all trying to diversify away from China to other countries. Because of how China's business is run (on a vague set of laws based on a whim of just one man that can change from one day to the next), and China's state-driven economy is in big trouble

"China is the answer" is an outdated and largely discredited bygone notion from the 90s. It's now already been tried, and it didn't work as intended. Time to move forward to other ideas

Asserting that "China is the answer" for "the Japanese business world" is clearly nonsense.

China is the hen that lays the golden eggs for many Japanese companies. You keep summarizing and rehashing the articles you read. They’re the same ones telling you China is collapsing.

"China is the answer" is an outdated and largely discredited bygone notion from the 90s. It's now already been tried, and it didn't work as intended. Time to move forward to other ideas

Need context here, Japanese companies and now, not the 90’s. Japanese companies know it needs China. You may have touched upon political expectations here. No China did not become the country the U.S. wanted it to be, but China has been the source of great wealth for American companies.

Japan had seen little growth over three decades. The U.S. is not going to pull Japan up.

Companies that have invested in China are now fleeing the country.

The Chinese Communist Party has prohibited foreign companies from transferring profits they have made in China overseas to begin with. As China's economy grows, labor costs have risen and the benefits have disappeared.

China risk is also increasing, and recently there has been a decline in investment amounts, a sharp drop in the number of companies moving into China, and a strong movement from China back to Japan.

Alternatively, the actual figures show that relocation to Southeast Asia is on the rise.

In the end, the Chinese market was nothing more than a castle in the sand for Japanese companies.

I jump on to Wednesday AUD drop. it drop from 109 yen to 106.5 yen. I betting it will be 1.10 yen by Friday 19 th

So weak!

They know they can’t challenge the dollar with intervention when the dollar is on the move. They wait till it hits a snag on some news - and then they jump in. Trying to make it seem like a new “trend”. Scare the market, they hope. Again: So weak!

"China is the answer" is an outdated and largely discredited bygone notion from the 90s. It's now already been tried, and it didn't work as intended. Time to move forward to other ideas

Need context here, Japanese companies and now, not the 90’s. Japanese companies know it needs China. You may have touched upon political expectations here. No China did not become the country the U.S. wanted it to be, but China has been the source of great wealth for American companies.

And it's now biting them in the butt

Japan had seen little growth over three decades. The U.S. is not going to pull Japan up.

There are other countries other than China and the US y'know

Japan need not put its eggs in a few baskets. The US did that with China, and it's now biting them in the butt. Japan should learn from the US' mistake with China

That is 24,000 yen per head, for every citizen, from toddlers to seniors and between. I really would recommend to pay it out to the citizens, so everyone can stem higher foreign currency prices if really needed, instead of burning that same huge amount of money every few days into the already ultra rich grey speculator's nowhereland , with only a few yen rate improvement as a theoretical paper value. Let's say, they have intervened four times , then everyone would have now 100,000 yen in cash, and it's obviously easy to pay individually any higher dollar prices, if there even are any for most people.