Japan’s Foreign Reserves Suffer Record $80 Billion Drop After Yen Support Measures
What Happened
"Japan’s foreign exchange reserves fell by a record $80 billion in August, dropping to about $1.21 trillion from $1.29 trillion in July. The decline followed large-scale government interventions aimed at supporting the yen, which had weakened sharply against the US dollar. Tokyo’s recent dollar-selling, yen-buying operations are estimated at a record 27.1 trillion yen this year, including a major intervention in late July. The effort helped the yen recover from near 40-year lows, though it also led to a sharp reduction in Japan’s reserve holdings. Rising global bond yields further reduced the value of reserve assets.
Key Takeaways
Japan’s record reserve drawdown underscores the scale of its efforts to stabilise the yen, highlighting policymakers’ willingness to deploy massive resources to defend the currency amid volatile global markets.