BOJ data suggests Japan spent $35 billion on yen-buying intervention

Central Bank of Japan data indicates the nation may have spent up to 5.48 trillion yen, equivalent to approximately $35 billion, on currency support measures. This intervention occurred on Thursday to halt a sharp decline in the yen against the US dollar, a move attributed to rising oil prices linked to the ongoing conflict in Iran.

The Bank of Japan's money market projections for May 7 showed a 9.48 trillion yen net outflow, significantly exceeding firm forecasts of 4 trillion to 4.5 trillion yen. This action marks the latest currency defence, following a similar $36.8 billion intervention in July 2024.

The specific figure of 5.48 trillion yen is derived from a discrepancy between the Bank of Japan's projected money market outflow and market forecasts, rather than a direct official announcement of the intervention amount. Yen-buying activity involves the central bank soaking up yen from markets, so any outsized shortfalls in funds can offer potential clues as to how much was spent on the intervention.

The recent depreciation of the yen is attributed partly to global factors, specifically a spike in oil prices driven by the Iran war, which impacts Japan's trade balance. This context underscores the external pressures facing the currency as global trade dynamics shift due to regional instability.

This marks the latest currency defence action, following a previous intervention in July 2024 where Japan spent approximately $36.8 billion. The central bank's response highlights the persistent challenges in maintaining currency stability against volatile external shocks.

While the exact timing and total volume of the Thursday intervention remain inferred from money market projections rather than being explicitly stated by the central bank, the data provides a clear indication of the scale of the financial support deployed.