(Source from Reuters/Alamy)
Japanese Finance Minister Shunichi Suzuki officially acknowledged his involvement in the foreign exchange market and said last month’s injection of 6.3499 trillion yen (about 61 trillion won) worth of funds into the foreign exchange market had a “constant effect.” According to data released by Japan’s Ministry of Finance the previous day, the Japanese government has injected more than 9 trillion yen to defend the exchange rate for two months.
According to NHK on the 1st, Finance Minister Suzuki said at a press conference held after the Cabinet meeting, “In order to maximize the effect of (market intervention) of quenching rapid exchange rate fluctuations, there are times when it is announced immediately after the exchange rate intervention.”
In other words, the Japanese government and the Bank of Japan (BOJ) have virtually admitted to the claim that they have intervened twice last month following last September.
Earlier in the market, speculation arose that the Japanese authorities intervened twice on the 21st and 24th of last month as the yen exchange rate per dollar surpassed the 150 yen level and hit a 32-year low. Masked intervention is a Japanese expression that refers to the government’s unofficial intervention in the foreign exchange market.
Market officials claimed that Japanese authorities bought the yen over the sudden strong yen and the yen-dollar exchange rate falling to the 144-yen level in an hour and a half at around 11:30 p.m. on the 21st. However, the Japanese authorities showed reluctance to respond to the two allegations of intervention.
Bloomberg said the Japanese government injected a total of 6.3499 trillion yen into the market on two occasions, based on data released by the Japanese Finance Ministry on its intervention in the foreign exchange market from September 29 to October 27. Among them, 5.5 trillion yen is estimated to have been spent on foreign exchange market intervention alone on the 21st of last month.
Considering that the amount invested in the foreign exchange market in September was 2.8382 trillion yen for the first time in 24 years, the Japanese authorities bought 9.1881 trillion yen in two months. This is worth about 88 trillion won in Korean won.
Experts, however, predicted that the Japanese authorities’ massive intervention in the foreign exchange market could take place several more times in the future. Atsushi Takeda, an economist at Itochu Research Institute, predicted, “There will still be more than 10 trillion yen in cash in Japan,” adding, “There could be three to five more large-scale interventions in September and October.”
MIKE CHOI
ASIA JOURNAL
