To support the Yen, Japan Spent a Record $42 billion in October.
To combat the yen's rapid decline versus the dollar, Japan invested a remarkable 6.3 trillion yen ($42.4 billion) in October. The country also attempted to prevent speculative actions from further pressuring the currency. The yen was around 148.57 per dollar on Monday in Tokyo.
Figures for the time frame of the end September to the end of October were made public by the finance ministry on Monday. The price of a suspected intervention on October was estimated by market analysts and central bank data to be approximately 5.5 trillion yen ($37.2 billion). Traders have been uncertain about how frequently authorities have intervened in the market and how longer they may keep supporting the currency because of other periods of significant volatility, including a big jump on October 24.
According to experts, Japan could still be keeping around 10 trillion yen in cash on hand, meaning that major interventions on the scale we saw in September and October may occur three to five more times. Their approach appears to be to move when it will have the biggest impact rather than moving too frequently. After announcing its first yen intervention in 24 years, the government has made the strategic decision to keep quiet about recent direct market activity. The 2.8 trillion yen move in September did not succeed in reversing the yen's downward trend; the currency fell to nearly 152 against the USD before experiencing a significant increase in the third week of October.
According to the ministry of finance, Japan had approximately $1.24 trillion in foreign currency reserves by the end of September. Deposits totaling $135.5 billion with foreign central banks rank between its most volatile foreign - currency assets. However, the chief currency official for the finance ministry has claimed that there are endless resources for intervention while declining to answer on whether government intervention in markets has resumed.
The US Treasury previously stated in September that it comprehended Japan's initial involvement. As long as interest rates between the US and Japan continue to diverge, the yen is anticipated to trade lower against the dollar. After the Bank of Japan held rates steady on Friday, the Fed appears prepared to raise rates significantly again this week. But not only yen encounter crises and falls against dollar, the recovery of euro is also challenged due to hawkish Fed risk.