(May 12): Japan’s foreign currency reserves at the end of April were largely unchanged from the previous month, likely an indication that currency intervention came too close to the end of the month to be reflected in the data.
The country’s FX reserves stood at US$1.17 trillion in April, largely unchanged from US$1.16 trillion a month earlier, according to a Finance Ministry report released Tuesday.
The data came after Japan stepped into the currency market on April 30 to support the yen. A Bloomberg analysis of central bank account data suggested authorities spent as much as US$34.5 billion on the operation. Tokyo is also suspected to have stepped into the market again in early May, with Bank of Japan data pointing to likely additional intervention activity of as much as US$30.6 billion.
In past interventions, Japan has financed its buying of yen by selling US Treasuries, moves that are reflected in monthly reserves data. But interventions conducted at the end of the month may not appear until the following month.
The release comes as US Treasury Secretary Scott Bessent visits Tokyo for meetings with Japanese leaders. Earlier this year, he warned Japanese counterparts that turbulence in Japan’s bond market could spill over into Treasuries, underscoring his sensitivity to large-scale selling by foreign holders.
Tuesday’s data showed foreign securities holdings at about US$1 trillion while foreign deposits stood at US$162 billion. Both were largely unchanged from the previous month, suggesting neither of the government’s typical funding sources for currency intervention showed a significant drawdown.
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Federal Reserve custody figures earlier pointed to possible Treasury sales tied to Japan’s intervention operations. Marketable Treasury securities held by the Fed for foreign official and international accounts fell by US$8.7 billion to US$2.73 trillion in the week through May 6.
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