By Atsuko Aoyama and Noriyuki Hirata
TOKYO, July 31 (Reuters) – Japan may have sold as much as $58.97 billion in its latest efforts to bolster its currency, central bank data indicated on Friday, signalling repeated efforts to stem the yen’s weakness.
The Bank of Japan’s projection for money market conditions for the following day suggests an 8.2 trillion yen net outflow of funds, compared with brokerage forecasts that range between a surplus of 1.4 trillion yen and a shortfall of 1.73 trillion yen.
Yen-buying activity involves the BOJ soaking up the currency from markets, so any outsized shortfalls in funds can offer an estimate of the size of any intervention.
Japan conducted a yen-buying, dollar-selling intervention in New York on Thursday, according to a market source, its first such foray in three months, as the currency’s slump to four-decade lows threatened to worsen living costs hit by the Iran war-driven energy shock.
The move came ahead of the conclusion of the Bank of Japan’s policy meeting on Friday. The central bank later in the day kept interest rates steady but signalled it would continue tightening.
The BOJ raised its policy rate to a 31-year high of 1% in June. Market players expect rate hikes at a faster pace, as the slow pace of rate hikes has been blamed for pushing the yen to a 40-year low.
The dollar sank to a more than two-month low against the Japanese yen on Thursday after what analysts said looked like official intervention.
After hitting 157.80 against the dollar on Thursday, the yen resumed its decline in Asian trade on Friday.
In European trade on Friday, the yen jumped briefly against the dollar again, with traders alert to the prospect of another intervention.
Japan spent a record 11.7 trillion yen intervening in foreign exchange markets between late April and early May. But the currency resumed its downtrend and slid to a low of 163.99 against the dollar last week.
(Reporting by Atsuko Aoyama, Noriyuki Hitata; writing by Junko Fujita; Editing by Alex Richardson and David Holmes)
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