Japan Reserves Drop $79.6B After Record Yen Intervention

Japan's foreign reserves experienced their largest-ever decline in August, falling by $79.6 billion as the government undertook record-scale intervention to support the nation's weakening currency. The reserves dropped to $1.208 trillion at the end of August, a decrease of 6.18 percent from the previous month, according to government data. The substantial drop occurred after Japanese authorities sold US dollars and bought yen to counter the currency's depreciation to levels not seen in approximately four decades. The intervention, which involved selling foreign securities, primarily US Treasuries, cost an estimated 15.4 trillion yen, equivalent to $98.66 billion, between July 30 and August 26. This marked the most significant intervention expenditure by Japan in a single month. The intervention helped lift the yen from lows near 164 against the US dollar to approximately 155.20 by August 3. However, the yen later weakened toward 160 before recovering to trade between 155 and 156 in early September. A notable aspect of the intervention was a coordinated effort with the United States, marking the first joint currency action between the two countries since 2011.