Japan recently revealed that it spent a staggering $62 billion in just five weeks to boost the yen, following its first intervention in forex markets since 2022 when the currency hit a 34-year low.
The Finance ministry data showed that the forex intervention operations totaled 9.79 trillion yen ($62 billion) between April 26 and May 29.
The Japanese currency has seen a significant decline, dropping from around 115 per dollar before Russia’s 2022 invasion of Ukraine. This drop is attributed to the Bank of Japan’s unconventional policy of maintaining ultra-low interest rates while other central banks have raised theirs.
Analysts have raised concerns about the effectiveness of the recent intervention in supporting the yen long-term, despite the significant resources available to Japan for such operations.
A weaker yen may benefit Japanese exporters and tourism, but it could lead to higher costs for imports and outbound travel.
In March, the Bank of Japan increased interest rates for the first time in 17 years, signaling a cautious approach to normalizing monetary policy.