Japan spent a record 6.35 trillion yen ($43 billion) when making what were likely multiple interventions in the currency market in October, Finance Ministry data showed Monday, as the nation sought to arrest the rapid depreciation of its currency.

The previous high was 2.84 trillion yen set in September, thought to have been primarily spent on Sept. 22 when Japan stepped into the market by buying the yen with U.S. dollars for the first time since 1998. Since then, Japanese authorities have kept mum on any intervention, leaving financial markets on edge.

The Finance Ministry did not disclose any daily breakdowns of the amount, spent between Sept. 29 and Thursday.

"Stealth" interventions are designed to keep market participants guessing whether Japanese authorities are actually intervening. After the yen neared 152 to the dollar, sources have confirmed Japan intervened on Oct. 21, despite market perceptions that such operations will do little to reverse the broader trend.

Japanese monetary authorities likely stepped in again on Oct. 24 as the yen surged in just minutes relative to the dollar. Finance Minister Shunichi Suzuki had warned that necessary steps would be taken to counter excess market volatility.

The main driver has been the widening gap between Japanese and U.S. interest rates as the Bank of Japan has ruled out the possibility of a near-term interest rate hike while the Federal Reserve is widely expected to go ahead with another hike in its policy meeting later this week.

The intense selling of the yen seen in recent weeks, which Japanese policymakers saw as partly driven by speculators, has been apparently taking a respite amid speculation that the Fed will slow its pace of monetary tightening. The yen was trading in the 148 zone on Monday.

"The yen could have weakened further and breached 160 to the dollar without the interventions," said Izuru Kato, chief economist at the Totan Research, a Japanese think tank. But he also noted that such operations can only slow the yen's fall.

Finance chief Suzuki, whose ministry asks the BOJ to step into the market, has said it is not specific levels but volatility that Japanese officials are closely monitoring.

Japan had $1.24 trillion in foreign reserves at the end of September, consisting of foreign securities, deposits and gold among others. The government carries out yen-buying, dollar-selling interventions by tapping the funds.

A weak yen has been considered a boon to Japanese exporters whose overseas profits are boosted in yen terms. But the rapid fall of the yen has created a headache for the resource-scarce Japan, inflating the import prices of energy, raw materials, food and other goods.

The Japanese government unveiled Friday a massive economic package to mitigate the pain of rising prices felt by consumers, and to support the economy amid Russia's war against Ukraine and the weaker yen. However, it also hopes that the yen at its lowest level in over three decades to the dollar will fuel a recovery in inbound tourism.

Prime Minister Fumio Kishida has said the government is keeping close tabs on developments in the foreign exchange market with the BOJ. "Speculative and rapid yen moves are not desirable for anyone," he told a press conference on Friday.

Market analysts say currency interventions cannot change the broader trend of yen weakness as the monetary policies of Japan and the United States continue to diverge.

For his part, BOJ Governor Haruhiko Kuroda has rejected the idea that the central bank's yield curve control program, aimed at keeping interest rates at rock-bottom levels, has been causing the yen's depreciation.

A strong dollar can help ease inflationary pressure in the world's largest economy where the inflation rate is at a multi-decade high and U.S. President Joe Biden has not seen it as a source of concern ahead of key midterm elections in early November.

"The United States has so far been tolerant of Japan's response because the influence of the Japanese economy has been relatively declining," Kato said.

"That said, however, if Japan were to sell massive U.S. Treasuries (it holds) to secure the funds to intervene, the United States would urge Japan to stop its intervention policy," he added.


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