Japan: forex interventions

[Eubulides <paraconsistent@xxxxxxxxxxx>]

The Japan Times:
Saturday, January 31, 2004
7.15 trillion yen spent on intervention this month

Japan spent 7.15 trillion yen on currency-market intervention in January,
marking a new single-month record, Finance Ministry data showed Friday.

With Japanese monetary authorities struggling to keep the yen from rising
against the dollar, the amount used between Dec. 27 and Jan. 28 easily
surpassed the previous monthly record -- September's 5.11 trillion yen.

Japan used more than 20 trillion yen to intervene in the currency market
in 2003, an almost three-fold increase from the previous yearly record --
the 7.64 trillion yen spent in 1999.

In January, the dollar dipped into 105 yen territory for the first time in
three years. At 5 p.m. Friday in Tokyo, the dollar traded hands at 105
yen.87-89.

A strong yen hurts the competitiveness of Japanese goods on global
markets, undermines exporters' profits and threatens the country's
export-led recovery.

The ministry also affirmed its determination to curb rapid gains in the
yen, saying it has sold 5.01 trillion yen in U.S. bonds to the Bank of
Japan to secure yen funds for currency market intervention.

It was the first time in 17 years for the ministry to take a step of this
kind.

The move provides the government with yen funds for more currency
operations, after it used up the 79 trillion yen limit set aside for
intervention in the initial fiscal 2003 budget.

The bond-selling scheme is designed to deal with emergency funding needs.
The government hopes to obtain Diet approval for plans to boost the
ceiling to 100 trillion yen in the supplementary budget for the current
fiscal year.

The government also plans to raise the limit further in the fiscal 2004
budget to 140 trillion yen.

The ministry and the BOJ agreed on the bond-selling arrangement late last
year. Under the accord, the ministry can secure up to 10 trillion yen in
funds for currency market operations through sales of its U.S. bonds.