The Japanese government’s intervention to bolster the national currency last week cost an estimated three trillion yen ($20.8 billion), a new record, the Nikkei business daily and other local media said Monday.
Japan’s finance ministry said last week it intervened in the currency market to support the yen, which has plummeted against the dollar in recent months on the widening policy gap between the US and Japanese central banks.
Citing estimation by market participants, local media including the Nikkei said the intervention — the first to counteract a weak yen since 1998 — likely cost more than a previous record of 2.6 trillion yen.
The move, which involves selling dollars and buying yen, saw the greenback retreat as low as 140.70 at one point, but it has since edged its way back, fetching 143.89 yen when stocks closed Monday.
Haruhiko Kuroda, head of Japan’s central bank, defended the move Monday.
“We understand the currency intervention this time around was conducted by the finance minister as a necessary measure against excessive fluctuations,” the Bank of Japan chief told reporters.
“It was an appropriate move,” he said.
The yen has been weakening against the dollar for months, but sank further on Thursday after the US Federal Reserve again hiked rates to tame inflation, while the BoJ left its ultra-loose monetary policy in place.
Prices in Japan are rising, with the Consumer Price Index (CPI) jumping by 2.8 percent year-on-year in August, the highest level since 2014.
But the central bank views the increases as temporary, and believes its dovish policy is needed to achieve a long-standing target of sustained two-percent inflation — seen as necessary to turbocharge growth in the world’s third-largest economy.