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Japan’s Intervention May Have Totaled $6.5 Billion, Nomura's Report Says

The Bank of Japan may have spent about 530 billion yen ($6.5 billion) when it intervened in the currency markets last week in an effort to stabilize exchange rates, according to Nomura Holdings Inc.

The central bank projected an 830 billion yen balance in its “Treasury funds and others” holdings today before it publishes its current account balance tomorrow. Before the BOJ, and other Group of Seven nations, intervened in the currency market, brokers estimated the amount would total 300 billion yen, according to Nomura.

The BOJ probably spent 500 billion to 600 billion yen when it intervened March 18, Nomura analysts led by Jens Nordvig wrote in a note to clients today.

“Historically, ‘Treasury funds and others’ increase two business days after intervention, providing an initial indication of the amount spent in intervention,” said Nordvig, a managing director of currency research in New York. “The estimate is also smaller than some expected and smaller than figures reported in the press.”

The Japanese currency fell the most in more than two years against the dollar March 18 after the BOJ was joined by other G- 7 central banks in an effort to stabilize foreign exchange markets. The yen had surged 4.5 percent in 26 minutes the day before to a post-World War II high amid speculation Japanese investors would repatriate assets to pay for rebuilding after the March 11 tsunami and resulting nuclear power crisis.

International support of the BOJ’s intervention may have led the central bank to need less money to achieve its goal of keeping dollar-yen above 80, Nordvig wrote.

The BOJ unilaterally sold 2 trillion yen in September after the currency climbed to 82.88 per dollar, the strongest at that time since 1995.

The yen traded at 81 per dollar at 11:31 a.m. in New York.

To contact the reporters on this story: Catarina Saraiva in New York at asaraiva5@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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