Japan studies adjustment of $1.3 trillion in foreign exchange reserve management, with limited effectiveness of $73 billion intervention

According to Reuters, the Japanese government is studying ways to adjust the use of approximately $1.3 trillion in foreign exchange reserves to increase returns. The Japanese government spent about $73 billion to buy Japanese yen in late April this year, resulting in a single month decline of 5.6% in foreign exchange reserves in May. However, the US dollar has recently risen again to around 161.70 against the Japanese yen. Japanese Finance Minister Takayuki Katayama has held a meeting with US Treasury Secretary Bessent to discuss the depreciation of the yen and intervention measures. Japanese Prime Minister Hayao Takashi said that the depreciation of the yen has made the performance of foreign reserves impressive, and some officials believe that they intend to use the proceeds to support the suspension of the food consumption tax. Insiders pointed out that the core function of foreign reserves is to provide funds for exchange rate intervention, and significant adjustments in allocation face difficulties.