Japan Forks Out Trillions To Bolster Yen

This intercession is the latest in Japan’s efforts to throw a lifeline to the yen after it dropped to its lowest mark against the USD in 38 years. The Japanese Ministry of Finance published data on Wednesday 31 July 2024 showing that the government paid out 5.53tn JPY – the equivalent of roughly $36.8bn – between 27 June 2024 and 29 July 2024 to try to strengthen the global position of the yen.

Based on a CNBC report, this amount was not surprising and aligned with expectations as the Japanese government had repeatedly warned that it would take steps to balance volatile currency shifts. Japan also confirmed that it first intervened in October 2022.

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The yen’s weakened position spurred the Bank of Japan (BOJ) to hike interest rates from 0% to 0.1%. This is the highest interest rate since 2008. The central bank put a stop to its policy on negative interest rates in March 2024 and the yen has been stumbling since.

Analysts indicated that the BOJ’s interest rate hike had the desired effect as the yen surged against the USD. At one stage, it was trading at approximately $150 per USD. Despite this slightly stronger show, the scales are still tipped in favour of the greenback. Economists said that the reprieve may be temporary and will fluctuate according to a dovish or hawkish stance by the US Federal Reserve.