The scale of the Japanese government's foreign exchange market intervention has surfaced! It is suspected to have propped up the yen with $34.5 billion. The foreign exchange market has entered a "high volatility golden week".

According to a summary of the analysis report by Wall Street forex strategists on the Bank of Japan's account, the Japanese Ministry of Finance may spend approximately $34.5 billion on Thursday, the latest intervention measure to support the yen exchange rate since July 2024. On Thursday evening, the yen exchange rate (mainly measured against the US dollar) saw a significant increase, prompted by Finance Minister Kanzo Kato's warning that the Japanese government is about to take "bold action." A source familiar with the matter later confirmed that the Japanese fiscal authorities had entered the market. Based on the comparison between strategists' analysis of the Bank of Japan's account and the predictions by Japanese currency brokers, the latest round of government intervention in terms of yen valuation could be around 5.4 trillion. In 2024, the Japanese authorities intervened to support the yen four times, spending an average of about 3.8 trillion each time. After Finance Minister Kanzo Kato's warning of the upcoming "bold action," which hinted at an intervention in the foreign exchange market, the yen exchange rate saw a significant increase on Thursday evening. Just a few hours later, media reports indicated that a source confirmed the Finance Ministry had taken measures to intervene in the foreign exchange market. Data released by the Bank of Japan on Friday showed that its current account is expected to decrease by 9.48 trillion due to fiscal factors next Thursday, the first working day after the Golden Week holiday. This reduction is much greater than the estimates of approximately 4.08 trillion by well-known currency brokers such as Tokyo Tanshi, Central Tanshi, and Ueda Yagi Tanshi. This is the first time under the leadership of Finance Minister Kanzo Kato that the Japanese Finance Ministry has intervened in the foreign exchange market and is largely seen as a preliminary success, as it led to a significant increase of over 3% in the yen exchange rate (against the US dollar). However, the battle is far from over. After the Tokyo stock market closed on Friday, the USD/JPY rate was around 156.55, indicating a slight depreciation of the yen after Thursday's significant strengthening. Due to the high market volatility recently, Kanzo Kato and her colleagues, including Japan's highest-ranking forex official Atsushi Mimura, remain highly vigilant. Kanzo Kato warned forex traders on Thursday to do the same; she stated that even during the five-day Golden Week holiday, traders are better off not putting down their phones. It was reported by Japanese media on Friday that the Japanese government is on standby 24 hours a day to deal with significant fluctuations in the exchange rate and may intervene in the market again, indicating that there may be unusually violent fluctuations in the foreign exchange market during the Golden Week holiday. The Golden Week holiday in Japan will continue until next Wednesday. In addition, Mimura told reporters earlier on Friday that preparations are in place to intervene in Japan's crude oil futures trading market to suppress the surge in domestic oil prices caused by geopolitical conflicts in the Middle East. Following the significant strengthening of the yen on Thursday, Brent and WTI crude oil futures prices dropped significantly. However, it is not clear if these trends are related or if the Finance Ministry simultaneously intervened. Senior officials of the Japanese government have repeatedly pointed out that speculation in the oil futures market is one of the factors exacerbating the weakness of the yen. If Japan also intervenes in the oil market, the total size of Thursday's intervention may exceed 5.4 trillion. But for now, traders are most concerned about whether the fiscal authorities will take follow-up actions like they did two years ago. Mimura stated, "I want to point out that we are just at the beginning of a long holiday." "We maintain extremely close contact with the US government, and I believe we have a common assessment of the financial market situation and intervention actions." Two years ago, the Japanese fiscal authorities intervened in the foreign exchange market twice during another Golden Week holiday to demonstrate their willingness to intervene in the market whenever deemed necessary. The first intervention set a record high of 5.92 trillion, and shortly after, another intervention worth about 3.87 trillion was conducted. The second intervention even lowered the USD/JPY rate to around 153, which is why traders are generally cautious after hearing indications that the Bank of Japan may intervene again. "I think the intervention measures are effective because they significantly lowered the USD/JPY trend to around 155 yen. But I think they are not out of the woods yet," said Takahide Kimura, executive economist at Nomura Comprehensive Research Institute and former board member of the Bank of Japan. "They may even intervene again during the Golden Week. This intervention demonstrates their determination to defend the 160-point defense line at all costs." Kimura said.