Japan may have spent $35 bln on April 29 intervention, BOJ data suggests
Updates with former official comment, analyst, additional background
By Kevin Buckland
TOKYO, April 30 (Reuters) -Japanese officials may have spent some 5.5 trillion yen ($35.06 billion) supporting the currency on Monday to pull it back from new 34-year lows, Bank of Japan data suggested on Tuesday.
The central bank's projection for Wednesday's money market conditions indicated a 7.56 trillion yen net receipt of funds, compared with a 2.05-2.30 billion yen estimate from money market brokerages that excludes intervention.
Currency trades take two days to settle.
The data suggests Monday's intervention was very close in size to the record 5.62 trillion yen spent on Oct. 21, 2022.
The yen slid to 160.245 per dollar JPY=EBS on Monday, its lowest level in more than three decades, then rapidly reversed to recover nearly six yen, spurring speculation that Japanese authorities had intervened to prop up their currency.
Japanese officials have refrained from saying whether they intervened, but former top currency diplomat Mitsuhiro Furusawa said it was "highly likely" the authorities stepped in to prop up the yen given its sharp moves in both directions.
"I don't really know whether authorities calibrated the timing and waited until the dollar hit 160 yen. The pace of falls was quite rapid from 158 yen to 160 yen though," Furusawa, who oversaw Japan's currency policy a decade ago, told Reuters on Tuesday.
Furusawa, who had also served as International Monetary Fund deputy managing director, said Japanese officials probably laid the ground for intervention when they met with their U.S. and South Korean counterparts on the sidelines of IMF gatherings this month.
Shoki Omori, chief Japan desk strategist at Mizuho Securities said the net funds receipt figure reported on Tuesday, strongly suggested an intervention.
At the same time, the yen's quick retracement of most of Monday's move showed how difficult it was to stop the currency's downward momentum, he said.
"This is very good news for hedge funds" and other speculators betting against the yen, Omori said.
The yen has depreciated more than 10% against the dollar so far this year, and was last changing hands at 156.89 per dollar.
Analysts point to the gaping differentials between Japanese and U.S. government debt yields as the force behind the yen's slide.
Even after the Bank of Japan raised interest rates for the first time since 2007 in March, policymakers have signalled a go slow approach to further tightening, which has kept long-term Japanese government bond yields JP10YTN=JBTC well below 1%.
By contrast, equivalent Treasury yields US10YT=RR have been pushing towards 5% as a robust economy and stubborn inflation forced markets to scale back their bets on Federal Reserve rate cuts. The U.S. central bank will announce its policy decisions on Wednesday, and market participants expect Chair Jerome Powell to retain his recent hawkish tone.
($1 = 156.8900 yen)
Reporting by Kevin Buckland and Tetsushi Kajimoto; Editing by Andrew Heavens, Kim Coghill and Tomasz Janowski
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