Japan's foreign reserves plunge record $79.6 billion after massive yen-buying operation
Japan's foreign reserves fell by a record $79.6 billion in August, the biggest monthly drop ever, following an unprecedented dollar-selling, yen-buying intervention.
Japan reported its steepest monthly fall in foreign reserves ever, with holdings shrinking to $1.208 trillion at August's end, a $79.6 billion drop from the prior month. The loss stemmed largely from a sell-off of foreign securities, chiefly U.S. Treasuries bought during earlier dollar-buying campaigns that constitute roughly 70% of the reserve pool. Between July 30 and August 26, the Ministry of Finance disclosed that Tokyo deployed 15.4 trillion yen, the largest month-long intervention in history, to support the yen.
The effort pushed the currency up from 40-year lows near 164 per dollar to as high as 155.20, before it later drifted back toward 160 and settled around 155-156 in early September. This operation was conducted jointly with the United States, the first coordinated intervention since 2011, and officials indicated that Japan could draw on a Federal Reserve backstop created during the COVID-19 pandemic to ease funding pressures.
Why it matters
The unprecedented reserve drawdown highlights Japan's aggressive steps to stabilize the yen and the limits of its intervention capacity.
How the sides frame it
MODERATE AGREEMENTBoth camps report the historic drop in Japan's foreign reserves and the large yen-buying operation, but left-leaning coverage stresses the record percentage decline and bond-market causes, while centrist coverage highlights the dollar amount of the loss, the size of the intervention and its effect on the yen’s exchange rate.
LEFT
Frames the story around the unprecedented percentage fall in reserves and attributes it to falling bond values and rising interest rates, noting a rise in gold holdings.
CENTER
Frames the story around the massive dollar-value loss and the historic yen-support operation, emphasizing the scale of the intervention and its impact on the yen’s price.
The left emphasises
- 6.18% decline—the largest percentage drop ever recorded
- reduction stemmed from falling market values of government bonds as interest rates rose
- gold holdings increased 13.3%
How this story developed
- Aug 29 Yen slips back below 160 per dollar after Fed chair's hawkish remarks
- Aug 30 Precious-metal futures fell sharply last week, with gold down about 3.8% and silver about 4%, as traders await US employment figures and Fed policy cues.
- Aug 30 ASX 200 futures are set to fall about 0.4% after US Federal Reserve comments lifted inflation worries and pushed US equities lower.
- Sep 3 Federal Reserve Governor Christopher Waller said the upcoming August inflation report will largely determine whether he backs a rate hike at the September meeting.
- Sep 4 President Donald Trump warned he will stop trading with deficit countries if the Federal Reserve does not lower interest rates.
- Sep 4 Trump invoked a Supreme Court ruling to justify his claim of presidential authority over trade deficits.
- Sep 6 Gold has dropped sharply since its January peak.
- Sep 6 European markets stayed steady following the strong U.S. jobs report while the Fed awaits the August inflation data.
- Sep 7 The yen rose from above 160 to the mid‑155 range, delivering its strongest weekly gain in a month.
- Sep 7 Baltha creditors convened a meeting to discuss the company’s debt situation.
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