Tokyo’s record 8.45 trillion Yen intervention only briefly weakened USD/JPY, with the pair erasing half its losses in three weeks.
The Japanese Yen remains under pressure as USD/JPY trades near 159.00, recovering nearly half the decline from Tokyo’s record 8.45 trillion Yen intervention three weeks ago. The pair fell from just under 164.00 to above 155.00 after the move but has since retraced most of the drop.
The intervention, followed by an additional 5.3 trillion Yen in coordination with the U.S. Treasury, aimed to stabilize the Yen. However, domestic investors treated the weaker Dollar as an opportunity, buying over 5 trillion Yen in foreign equities and bonds in the two weeks to August 15, reversing prior net selling of 300 billion Yen.
Without a broader policy shift, the intervention effectively provided a discount for carry trades, with reserves used to fund rather than deter speculative flows. The Yen’s rebound has stalled as institutional demand for foreign assets persists.