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UPDATE 1-Japan FX intervention totalled Y2.12 trln in Sept

Published 09/30/2010, 06:25 AM
Updated 09/30/2010, 06:28 AM

* Aug. 30 - Sept. 28 intervention totalled 2.12 trln yen

* Japan resumed yen-selling intervention on Sept. 15

* Market had expected about 2 trillion yen for Sept. 15

By Masayuki Kitano

TOKYO, Sept 30 (Reuters) - Japanese authorities conducted a total of 2.1249 trillion yen ($25.37 billion) in currency intervention in the latest month to Sept. 28, the Ministry of Finance said on Thursday.

That was roughly in line with market estimates for about 2 trillion yen ($23.9 billion) in intervention on Sept. 15, the only confirmed instance of Japanese currency intervention during that span.

"This number was pretty much in line with what the market had been talking about," said Ian Stannard, senior currency strategist at BNP Paribas in London.

Finance Minister Yoshihiko Noda confirmed that Tokyo had unleashed its first foreign exchange intervention in six years on Sept. 15, when the dollar hit a 15-year low of 82.87 yen.

"With regard to future intervention, I think what will drive them is whether dollar/yen equals its 15-year lows or breaks below that level," Stannard said.

"Right now, a lot of corporate flows are pushing up the yen and that will happen regardless of monetary policy. It will be a tough job to go against the momentum."

If confirmed that the monthly figure all took place on Sept. 15, that will beat the previous record of 1.666 trillion yen for Japanese yen-selling intervention on a single day set on Jan. 9, 2004.

The MOF will announce details such as specific intervention dates and currency breakdowns when it unveils its July-September intervention data, expected in early November.

The dollar has been under selling pressure on speculation the Federal Reserve will take more quantitative easing steps later this year to shore up the U.S. economy.

That has driven the yen higher, which has acted as a drag on Japanese exports and raised concerns in Tokyo that it could derail a fragile economic recovery and exacerbate deflation.

The dollar was trading at 83.30 yen on Thursday, less than half a yen above its 15-year low. It leapt 3 yen on Sept. 15 to 85.78, when the authorities intervened throughout the Asian, European and U.S. trading day.

The Bank of Japan intervenes on behalf of the Ministry of Finance and traders said Sept. 15 was also probably the first time it had conducted intervention by directly placing orders on electronic trading platform EBS.

The dollar also spiked last Friday on rumours of further intervention but there was no confirmation Japan had intervened, and the dollar lost all its gains by the end of the day. Money market data later showed it was unlikely and Prime Minister Naoto Kan also said that day he was unaware of any new intervention.

Before Sept. 15, Japan had not intervened in the foreign exchange market since March 2004, when it ended a 15-month, 35 trillion yen selling spree aimed at preventing a strong yen from snuffing out an economic recovery. (Additional reporting by Charlotte Cooper and the London forex team; Editing by Chris Gallagher)

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