Japan's August Foreign Reserves Fall a Record $80 Billion on Yen Intervention

Japan's foreign reserves fell to $1.207 trillion in August from $1.287 trillion in July, a 6.18% drop and the fastest decline on record since 2000. According to Sina Finance, the Ministry of Finance did not explain the decline in the data, while market participants said it mainly reflected yen-support intervention rather than financial stress. According to Sina Finance, media reports cited unnamed Finance Ministry officials as saying the drop was mainly due to intervention to support the yen and a decline in the value of government bonds held as global bond yields rose. Masahiko Loo, senior fixed-income strategist at State Street Investment Management, said the reserve decline was mainly caused by Japan's recent foreign-exchange intervention selling dollars and buying yen. Japan bought about 11.73 trillion yen in April and May combined, then carried out a larger 15.4 trillion yen intervention at the end of July, with the U.S. simultaneously selling euros to support the yen. According to Sina Finance, Finance Ministry data showed intervention spending this year totaled 27.1 trillion yen, exceeding the 20.4 trillion yen annual record set in 2003. The yen fell to a 40-year low of 163.98 on July 23 and was last quoted at 155.98. Loo said the decline reflected policy action rather than financial stress.