Sharp fluctuations in the Japanese yen have been observed since 30 April, when the currency weakened past JPY160 against the US dollar before surging by 3 percent on the same day. Analysts cited an alleged direct intervention by the Japanese government as the cause of the sharp appreciation, speculating that Japan’s Ministry of Finance spent around $34 billion to support the market.

The appreciation, however, was short-lived as the yen continued to weaken, reportedly reaching JPY157.87 per dollar last Tuesday. It then sharply rose again by 2 percent to JPY155.02 per dollar on Wednesday, 6 May, suggesting another possible intervention by the Japanese government.

The government’s actions are considered relatively small compared to Japan’s foreign exchange reserves, which stood at $1.16 trillion at the end of March.

However, direct market interventions could place Japan’s status as a freely floating exchange-rate economy under scrutiny, particularly if two more interventions are observed before November. This is based on International Monetary Fund (IMF) guidelines limiting interventions to three instances before a country risks losing its free-floating designation.

This appears to contradict statements made by Japan’s top currency official, Atsushi Mimura, who maintained that the country’s interventions do not affect its status as a free-floating market.