TOKYO (Reuters) – Japanese Finance Minister Shunichi Suzuki said on Friday that currency interventions should be carried out with restraint after data suggested that Tokyo had used up a huge pool of foreign exchange reserves for its latest yen purchases.
“Foreign exchange intervention should be made taking into account its necessity and effectiveness,” Suzuki said during a regular news conference after a cabinet meeting.
While intervention can be used to stem excessive movements in the foreign exchange market, such action “should be conducted in a restrained manner,” Suzuki said.
Friday’s data from the Ministry of Finance showed that Japan’s foreign exchange reserves fell to $1.23 trillion at the end of May, or $47.4 billion less than a month earlier, mainly due to a decline in the foreign securities portfolio.
Japanese authorities declined to reveal the composition of the country’s foreign exchange reserves, but most foreign securities are believed to be held in U.S. Treasuries.
“It is almost certain that Japan sold part of its holdings in the U.S. Treasury to finance the intervention of selling dollars and buying yen,” said Ueno Tsuyoshi, senior economist at the NLI Research Institute.
Finance Ministry data showed last week that authorities spent 9.79 trillion yen ($62.85 billion) on market interventions to support the yen, which is widely seen as slow April or early May.
($1 = 155.7800 yen)
