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UPDATE 1-Japan portion of G7 yen intervention Y692.5 bln--MOF

Published 03/31/2011, 08:05 AM
Updated 03/31/2011, 08:12 AM
EXAH
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* Japan thought to have done most part of G7 intervention

* Joint intervention more effective than unilateral action

* Exact total size of G7 intervention not known (Adds details)

TOKYO, March 31 (Reuters) - Japan conducted a total of 692.5 billion yen ($8.4 billion) in foreign exchange intervention in March, when Group of Seven (G7) countries conducted their first joint intervention in more than a decade, the Ministry of Finance said on Thursday.

The Japanese yen has since eased back to around 82.80 yen to the dollar , compared with a level of 79.50 yen just before Japanese Finance Minister Yoshihiko Noda said on March 18 that the G7 had agreed to step in the currency market. The day before that, the yen hit a record high of 76.25 yen.

The data only covers Japan's intervention and the total size of the G7 intervention is still not known, although many market players think Japan did most of the job.

But the joint move appears to be working more effectively than Japan's unilateral intervention in September, when it sold a record 2.12 trillion yen to stem a rise in the yen.

"The announcement effect of coordinated intervention was effective, making the latest intervention more efficient," said Teppei Ino, an analyst at Bank of Tokyo-Mitsubishi UFJ.

The data does not specify which currencies were bought and sold but market players said the Bank of Japan bought the dollar against the yen.

The release from the Finance Ministry simply said the total amount of foreign exchange intervention operations for the period from February 25, 2011 through March 29, 2011 was 692.5 billion yen.

That amount was not too far off market players' estimates of coordinated intervention of around 530 billion yen, give or take a few hundred billion yen that had been based on BOJ money market data.

Those estimates were based on several assumptions, including one that all the yen settlements related to G7 intervention cleared with the BOJ, which some analysts say may not be the case.

Also, if a foreign central bank finances its yen selling by selling Japanese short-term bills or bonds, the BOJ data may not capture the flows because the data only shows net, and not gross, yen payments to banks from the public sector, including foreign central banks. (Reporting by Hideyuki Sano; Editing by Edwina Gibbs)

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