Japan spends record $96.5 billion in one month to support yen

Japan spends record $96.5 billion in one month to prop up yen

The Japanese government has spent an unprecedented 15.4 trillion yen ($96.5 billion) in foreign exchange market interventions in the past month to combat the depreciation of its currency, the yen.

The funds were used between July 30 and August 26. The scale of the intervention shows how seriously Tokyo is trying to raise the yen from its lowest levels in nearly 40 years. A weakening national currency can be beneficial for Japan's major exporters, but it also increases the cost of imported goods such as energy.

Japan imports almost all of its energy resources from abroad, about 95 percent of which comes from the Middle East. Therefore, war in the region and disruptions in supply pose additional risks to the country's economy.

The yen's weakness is also being driven by the interest rate differential between Japan and other major economies. The Bank of Japan left its key interest rate unchanged at its July meeting, but policymakers have signaled they are prepared to tighten monetary policy further. Market participants are betting on a 65 percent chance of a rate hike at its September meeting.

The Bank of Japan intervened in the foreign exchange market on July 30 and 31 by buying yen. The move was a rare joint intervention with the United States. South Korea also conducted its own won purchases at the same time as Japan's intervention.

At that time, the yen fell to about 164 yen per dollar, one of its weakest levels in 40 years.

According to previously released data from the Bank of Japan, the volume of intervention on July 30 alone may have reached 9.6 trillion yen. This is significantly higher than the confirmed daily record of 6.3 trillion yen set on April 30, 2026.

After the intervention, the yen initially strengthened from 163 yen to 155.20 yen per dollar. The exchange rate has since stabilized and has been around 159.50 yen since August 10.

Detailed daily data on the 15.4 trillion yen total expenditure announced by the Ministry of Finance is expected to be available in early November, when the quarterly report is released.

In September-October 2022, the Japanese government also intervened in the foreign exchange market to support the exchange rate of the national currency, the yen. From September 29 to October 27, 6.35 trillion yen ($43.06 billion) was spent on interventions.