Thursday, September 8, 2011

Japan Reaps An All-time High FX Reserves Record After Yen Intervention In August

Driven by fears that its soaring yen may thwart its economic recovery following a destructive earthquake and tsunami in March, the Japanese government has played a hand in the currency market on August 4.

Jun Azumi, minister for Japanese Ministry of Finance told Reuters reporters that on August 4, the government spent a record high of 4.5129 trillion yen, resulting in an August foreign reserves value of $1.22 trillion, a 0.07 trillion difference from July's $ 1.15 trillion foreign reserves.

The huge expenditure also provided a brief lift to dollar as it traded above 80 yen. But after two weeks, the U.S. dollar went down to 75.941 per yen.

Azumi was quoted on the report that the amount spent was the biggest expenditure of the government in the currency market compared to 2.125 trillion spent on Sep 15, 2010. On Wednesday, the U.S. dollar traded with yen at 77.50 after the Swiss National Bank put an exchange rate cap on its skyrocketing franc, a move that shocked the whole markets. more