Japan Buys Yen for Second Consecutive Day to Intervene in Forex Market
The Japanese government and the Bank of Japan have continuously implemented yen-buying interventions in the foreign exchange market.
In the New York forex market, the yen strengthened rapidly against the dollar, briefly rising to around the mid-157 range; market estimates suggest the intervention scale could reach hundreds of billions of dollars, with indications of coordination with South Korea and relevance to U.S. interest rate checks.
This move aims to curb further depreciation of the yen after it fell to a nearly 40-year low, causing significant fluctuations in the dollar/yen pair and raising concerns about the sustainability of the intervention.
Source: Public Information
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The Japanese Ministry of Finance and the central bank have resumed direct intervention against the backdrop of significant yen depreciation, having previously conducted large-scale buying operations in April and May. This time, they chose to act during the New York session to amplify the impact.
In terms of capital and policy pathways, the intervention supports the domestic currency by selling dollar reserves, motivated by the need to alleviate import costs and inflationary pressures, while also conveying a firm stance to the market, potentially coordinated with the U.S. to enhance effectiveness.
Drawing parallels with multiple yen intervention cycles from 2022 to 2024, as well as historical cases that escalated to joint actions, we are currently in a phase of transitioning from "unilateral intervention to potential multilateral support."
Essentially, this is a struggle for pricing power: when market speculation drives the exchange rate away from fundamentals, official reserves become a short-term pricing anchor, leading to rapid replenishment of short positions and reassessment of carry trade risks.
ABAB News · Cognitive Law
Intervention is a direct confrontation of reserves against speculation.
Continuous actions are more deterrent than a single instance.
Exchange rate bottoms are often defined by official funds.