Over the past 30 years, major foreign exchange interventions have been conducted not only when the yen was appreciating but also during periods of yen depreciation. This chronological review examines the major interventions since 1995, against a backdrop of sharp market moves, speculative activity and divergences from fundamentals.
This article reviews the history of Japanese government foreign exchange intervention over the past 30 years, focusing on the circumstances in which intervention was conducted, including not only exchange rate levels but also the speed and background of market moves. It first explains that the formal term for intervention is foreign exchange market intervention, and that the Ministry of Finance decides whether to intervene, with the intervention carried out following a decision by the Minister of Finance.
In 1995, the yen appreciated rapidly, reaching the ¥79-per-dollar range, prompting yen-selling and dollar-buying intervention. By the second half of that year, the exchange rate had returned to the ¥100 range. In 1998, the yen depreciated against the backdrop of the Asian currency crisis, and yen-buying and dollar-selling intervention was conducted. Interventions totaling at least several billion dollars were carried out in April and June.
From 2003 to 2004, large-scale yen-selling and dollar-buying interventions were repeated to curb yen appreciation during a period of deflation. In 2010, intervention was conducted for the first time in approximately 6 and a half years amid concerns about yen appreciation following the global financial crisis. In 2011, following the disruption caused by the Great East Japan Earthquake, G7 coordinated intervention was conducted along with additional intervention by Japan.
In 2022, the yen depreciated rapidly against the backdrop of widening interest rate differentials between Japan and the United States, prompting yen-buying intervention for the first time in 24 years. Intervention continued from September into October. In 2024, the yen weakened to around ¥160 per dollar, and interventions totaling ¥9,788.5 billion were conducted from April through May, followed by additional intervention in July.
In 2026, intervention expanded into the largest yen-buying operation on record, with total intervention from the end of April through June reaching ¥11,734.9 billion. Coordinated intervention by Japan and the United States was also conducted in July. As the amounts of subsequent interventions have continued to be disclosed, greater emphasis has been placed on the speed of market moves.
The author points out that foreign exchange intervention should be assessed not only by the level of the exchange rate, such as how many yen there are to the dollar, but also by the speed and background of market moves, the presence or absence of speculative activity, and divergences from fundamentals. Companies therefore need to monitor carefully the impact that the speed of exchange rate movements can have on their finances.