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Japan’s foreign reserves fall by record following market turmoil, FX intervention By Reuters

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© Reuters. FILE PHOTO: Japanese yen banknotes seen in this illustrative photo taken on September 23, 2022. REUTERS/Florence Law/Illustration

Written by Tetsushi Kajimoto

TOKYO (Reuters) – Japan’s foreign reserves fell to a record $54 billion in September, official data showed on Friday, as global market volatility weighed on the value of foreign bonds and prompted dollar-selling intervention to stem a sharp drop in the yen.

Reserves amounted to $1.238 trillion at the end of September, the lowest amount since the end of March 2017, according to Finance Ministry data.

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The data on Japan’s foreign exchange reserves, the world’s second largest by volume after China, came a week after separate Finance Ministry figures showed Tokyo spent up to 2.8 trillion yen on market intervention last month.

Chart: Japan’s dollar reserves drop https://graphics.reuters.com/JAPAN-ECONOMY/RESERVES/zjpqkxogepx/chart.png

Markets are speculating that Tokyo has sold off US Treasuries in a dollar selling intervention after the yen fell sharply to a 24-year low against the dollar. Friday’s Treasury data appeared to support this assumption, as it showed a record drop in the value of securities, including US Treasuries, held in reserves.

However, Finance Minister Shunichi Suzuki refused to confirm whether US bonds were sold as part of its intervention in selling the dollar.

“Factors underlying the declines included the decline in the market value of securities due to large increases in bond yields, depreciation of euro-dollar assets due to the depreciation of the euro against the dollar, and the sale of foreign currencies under the intervention,” Suzuki told reporters.

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“I cannot comment on transactions related to the intervention. We will manage the reserves by paying attention to safety and liquidity.”

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For most of this year, and especially over the past few months, the US dollar has jumped to record highs against several rival currencies on the back of the Fed’s hawkish policy tightening, causing a jolt in the financial markets. Rising global inflation, which is behind the Fed’s action, has caused the value of bonds to plummet around the world.

Japan’s foreign reserves consist of cash deposits held in offshore central banks and the Bank for International Settlements (BIS), securities including US Treasuries, gold, the IMF’s reserve position and Special Drawing Rights (SDRs).

The Ministry of Finance did not disclose the composition of currencies in the reserves, which are believed to be mostly in US dollars from the previous practice of buying dollars, interfering with selling the yen to prevent a strong yen from hurting exporters.

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Intervention in buying yen and selling dollars has been rare in Japan, which has long relied on car and electronics exports as a major driver of economic growth.

Now, policy makers are more concerned about the impact of a sharp unilateral weakening of the yen on the economic recovery stemming from the COVID-19 pandemic as it drives up the cost of living while making it difficult for business planning.

The previous record amount for a one-day intervention was 2.6 trillion yen spent in April 1998 during the 1997-98 Asian financial crisis.

Investors are closely watching the daily July-September intervention data due in November to see if the authorities have implemented a “covert intervention,” or are intervening without an official announcement.

Japan had not interfered with selling dollars and buying yen since 1998, until the authorities entered the market on September 22 when the Japanese currency fell sharply to its lowest level in 24 years near 146 yen to the dollar.

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MicroStrategy is at its lowest level since 2020 after the sales were revealed

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(Bloomberg) — Shares of MicroStrategy touched their lowest level since August 2020 after the enterprise software company, which in recent years has been known as the largest buyer of bitcoin, revealed its first sale of the token.

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The stock fell 1.1 percent to $136.63 on Thursday, down 75 percent this year. Bitcoin rose less than 1% to around $16,590 and is believed to have fallen 64% since the start of the year.

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In a filing on Wednesday, MicroStrategy said it acquired approximately 2,395 Bitcoin between the beginning of November and December 21 through its subsidiary MacroStrategy, and paid out approximately $42.8 million in cash. It then sold 704 of the tokens on Dec. 22 for a total of about $11.8 million, citing tax purposes, before buying another 810 of them two days later.

Matt Malley, chief market strategist for Miller Tabak + Co. Step down as CEO. This news means they don’t seem to want to do that anytime soon.”

Overall, MicroStrategy held about 132,500 bitcoins worth over $4 billion USD as of December 27th. The company paid an average purchase price of $30,397 per bitcoin.

“Given MicroStrategy’s $2.4 billion in leverage, we believe the company may have a lot of leverage over Bitcoin, and may face some liquidity risk,” Jefferies analyst Brent Thiel wrote in a note on Wednesday. Thill has an “underperform” rating on the stock and a price target of $110.

Over the years of the pandemic, MicroStrategy has become well known for its Bitcoin takeovers, largely led by Saylor. Earlier this year, Saylor stepped down from that role and now serves as CEO at the company and continues to lead its bitcoin strategy.

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MicroStrategy was trading around $120 before Saylor first announced the company’s Bitcoin purchases in 2020. The stock reached an all-time high of $1,315 in February 2021.

(Updates to include the stock’s closing price in the second paragraph.)

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Bankman-Fried May File Petition in New York Federal Court Next Week Before Judge Louis Kaplan By Cointelegraph

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Former FTX CEO Sam Bankman-Fried is set to appear in court on the afternoon of January 3 to enter a lawsuit over two counts of wire fraud and six counts of conspiracy against him related to the collapse of cryptocurrency exchange FTX, according to Reuters. mentioned on December 28, citing court records. Bankman-Fried will appear before District Judge Lewis Kaplan in Manhattan.

Judge Kaplan was appointed to hear the case on December 27 after the original judge in the case, Ronnie Abrams, Resigned herself because of connections between FTX and the law firm Davis Polk & Wardwell, where her husband is a partner. The company provided advisory services to FTX in 2021.