Japan Spends $35 Billion in Yen Intervention

Japan likely spent around $35 billion intervening in currency markets to prop up the yen, according to Bank of Japan data. The figure comes from a gap between the BOJ's projected and actual current account balances, a method market watchers use to estimate intervention size when the government does not immediately confirm action. The yen has been under pressure as the wide interest rate gap between Japan and the United States pushes investors to hold dollars over yen. Currency intervention works by having Japanese authorities sell foreign reserves, typically U.S. dollars, and buy yen to lift its value. A $35 billion outlay would rank among the larger single intervention episodes in recent years. Japan spent roughly $65 billion across several rounds in late 2022 to defend the yen from multi-decade lows. Markets will watch whether the move stabilizes the yen or proves short-lived without a shift in underlying rate differentials. Sustained yen weakness raises import costs for Japan, feeding inflation in energy and food.