TOKYO (MNI) Japan continued to sell yen heavily in the London and
New York markets on Wednesday, with the total amount seen exceeding Y2
trillion — the largest single-day yen-selling intervention on record,
the Nikkei reported on Thursday.
The government and Bank of Japan carried out their first currency
market intervention in six and a half years during Tokyo trading hours.
They are expected to continue these efforts in the days to come in a bid
to stem the yen’s rise against the dollar.
The Ministry of Finance manages the foreign exchange special
account, Japan’s war chest for currency intervention.
Japanese authorities sporadically intervened in the New York market
to speed the yen’s slide, according to sources familiar with the matter.
These actions helped weaken the currency to the upper-Y85 level against
the dollar in overseas trading while spurring a decline against the
euro.
Speculation that other Asian governments could follow suit weakened
their currencies against the dollar as well.
Japan is believed to be relying on commercial banks and other
financial institutions to carry out the yen-selling abroad instead of
asking overseas central banks to do so on its behalf, given the
unilateral nature of the latest intervention.
The daily record for an intervention by Japan stands at around Y2.6
trillion for operations conducted in April 1998. But this involved yen
purchases against the dollar to prevent a sharp weakening of the
Japanese currency.
The government and the BOJ conducted yen-selling interventions
topping Y1 trillion a day on several occasions between 2000 and 2002 to
cool the yen, which had been heating up on mounting expectations for
domestic economic growth.
Japan last intervened in mid-March 2004, when it ended its massive
15-month-long yen-selling operation against the dollar and euro.
tokyo@marketnews.com
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