Japan likely conducted significant yen-buying intervention on Monday, based on data from the Bank of Japan and private money brokers. According to the BOJ’s projection released on Tuesday, commercial banks’ deposits at the central bank were expected to decrease by 7.56 trillion yen, approximately $48.36 billion, on Wednesday due to fiscal factors. This was significantly higher than the 2 trillion yen drop predicted by money-market brokers the previous week.
The gap of 5.5 trillion yen between the BOJ’s forecast and the estimates by money brokers suggests the size of the reported currency intervention on Monday, which has not been officially confirmed by the government. Fiscal factors influencing changes in account balances at the BOJ include government bond issuance, tax payments, and currency intervention by the Finance Ministry. While money brokers consider factors like new bond issuance, they do not factor in currency intervention.
On Monday, the yen initially weakened to a new three-decade low of around 160 to the dollar before surging by as much as five yen against the dollar. For more information, contact Megumi Fujikawa at megumi.fujikawa@wsj.com (END) Dow Jones Newswires.