Bank of Japan Deposits Suggest Record 8 Trillion Yen Spent on Intervention

Japan may have spent a record amount intervening yesterday to stem the yen’s gains, according to the Bank of Japan’s projection of deposits held by financial institutions at the central bank.

The BOJ estimated that deposits climbed 7.7 trillion yen ($99 billion) to a total 37.2 trillion yen, it said in a statement released today in Tokyo. The figure suggests that the government sold approximately 8 trillion yen yesterday after the currency strengthened to a post-World War II high, said Yuichi Takahashi, a market economist at Totan Research Co. in Tokyo.

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Japan Will Continue to Intervene on Yen as PM Noda’s Agenda at Risk

Japan’s government signaled it is prepared for sustained intervention to ward off speculators from yen purchases after currency appreciation forced companies from Panasonic Corp. to Honda Motor Co. to lower earnings forecasts.

Finance Minister Jun Azumi said in Tokyo he will “continue to intervene until I am satisfied,” after yen sales yesterday that Credit Suisse Group AG analysts estimated may have exceeded $50 billion. The intervention was the first since August, when Japan spent 4.51 trillion yen $57 billion seeking to stem the currency’s surge to a postwar high against the dollar.

The effort showed support by Prime Minister Yoshihiko Noda for exporters seeing a loss in competitiveness after the yen rose 15 percent against the dollar and 21 percent versus the euro the past two years. With Nissan Motor Co. Chief Executive Officer Carlos Ghosn warning last month about a hollowing out of industry, lack of action risked undermining Noda’s agenda, said Hideo Kumano, an economist at Dai-Ichi Life Research Institute.

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Dollar’s Many Woes Complicate Japan’s Yen Intervention

When it comes to weakening the yen, currency speculators are the least of Japan’s problems.

That’s because when policymakers intervene to limit yen strength, as they did Monday, they square off against a formidable array of forces, including U.S. monetary policy, Chinese reserve managers and global investors from Texas to Tokyo united by one desire: to sell the U.S. dollar.

Investors and market analysts say that explains why prior efforts to weaken the yen against the dollar have failed and why the chances of success this time around are equally slim.

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Ghosn Says Japan Failing to Curb Yen Shows Jobs Not Top Priority

Carlos Ghosn, chief executive officer of Nissan Motor Co., said Japan faces a “hollowing out” of its industrial base should the government fail to take steps to counter the yen’s rise.

“I have spoken to the prime minister about this directly,” Ghosn said in an interview from Rio de Janeiro yesterday after Yokohama, Japan-based Nissan announced a new $1.4 billion auto plant in Brazil. “If Japan wants employment, you’re going to have to do something about establishing a normal exchange rate.”

Nissan, Toyota Motor Corp. and Honda Motor Co., Japan’s three largest automakers, are shifting production overseas as the yen’s surge erodes the profitability of building cars in their home market. The nation’s currency has risen 5.7 percent this year against the dollar and touched a postwar high of 75.95. The government, led by the Democratic Party of Japan, last intervened to weaken the yen in August.

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Japan boosts intervention war chest to curb yen

Japan’s finance minister said on Friday the government will secure an additional 15 trillion yen in funds for currency market intervention, as it looks to boost its ability to tame the yen.

Jun Azumi added that the finance ministry will require currency traders to report daily their trading positions for another three months beyond the end of September in an effort to deter speculative moves.

Japan will boost the size of its intervention funds by 15 trillion yen ($195.79 billion) to "flexibly" respond to the yen’s upward trend, Azumi said, adding that its current strength threatened Japan’s recovery.

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BOJ’s Yen Intervention Leaves Trail Of Blood And Gore

The Bank of Japan cut short its planned two-day meeting and went straight for the currency market’s jugular, sinking its teeth deep in to the artery and achieving the maximum blood-loss from its victims. The unilateral nature of its intervention was precisely what the authorities had hinted at the day before. Market participants were clearly distracted by the blood still flowing dangerously from other open wounds as growth stalls around the world adding to fears that the death-spiral facing investors is merely at the beginning.

Japanese yen – Considering the pretty well-flagged signs that the Bank of Japan would likely intervene after its August policy meeting, the impact was still significant. A 4% slump in the yen was the largest since intervention in October 2008 and achieved more today than when G7 central bankers joined forces on March 17 in the wake of the Japanese earthquake and tsunami. And while the impressive result is a dollar rally back above ¥80.00 I’m still left wondering whether the yen’s restraint can be maintained.

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