Japan carried out "stealth" foreign exchange interventions twice in October with a record 5.62 trillion yen ($42 billion) spent on one of the days to stem the yen's rapid fall against the U.S. dollar, government data showed Tuesday.
The largest-ever yen-buying operation came as the dollar neared 152 yen on Oct. 21, pushing it down by nearly 6 yen, followed by 729.6 billion yen spent on Oct. 24 when the U.S. unit also dropped in a short span of time.
"We took appropriate action to counter excess volatility caused by speculators," Finance Minister Shunichi Suzuki said at a press conference. "The government will closely watch developments in the currency market."
The previous record was 2.84 trillion yen spent on Sept. 22.
The yen's rapid depreciation had raised alarm bells among Japanese authorities, prompting Japan to spent a total of over 9 trillion yen in September and October to stop it.
The Finance Ministry conducts currency market interventions with the Bank of Japan acting as its agent.
Japanese authorities announced they had stepped into the market on Sept. 22, in their first yen-buying, dollar-selling operation in a quarter of a century, but kept mum thereafter.
Such stealth interventions are meant to maximize their impact by leaving market participants wary.
The yen came under intense selling pressure as financial markets were pricing in the widening gap between Japanese and U.S. interest rates. The BOJ was deeply committed to its ultralow rate policy while the Federal Reserve entered its rate hike cycle to tame inflation.
Back then, Japanese authorities warned that currency moves should be stable, reflecting economic and financial fundamentals.
A weak yen inflates import costs for resource-scarce Japan while it boosts the earnings of Japanese exporters in yen terms. Still, the currency's rapid drop is part of the reason why Japan's inflation has remained above the BOJ's 2 percent target for months.
The International Monetary Fund has said the effects of foreign exchange interventions are only temporary and should be limited to "special circumstances" such as when market moves are disorderly and financial stability are at risk.
The United States did not publicly raise concern about Japan's interventions.
