TOKYO Reuters -- Japan's government will confirm on Friday how much money it spent in the foreign exchange market last week to prop up the yen, which may highlight the hurdles Tokyo could face in making frequent forays into the market to stem sharp falls.
According to money market analysts, Tokyo likely spent a record 3.6 trillion yen $24.9 billion on Sept. 22 in its first dollar-selling, yen-buying intervention in 24 years to stem the currency's weakening.
A final figure will be available when the Ministry of Finance MOF releases the total amount it spent for intervention from Aug. 30 to Sept. 28, at 1000 GMT on Friday.
Japan currently holds about $1.3 trillion in reserves, the second biggest after China, of which $135.5 billion are held in the form of deposits parked with foreign central banks and the Bank for International Settlements BIS. There is a $135.5 billion in deposits that can be used to finance further dollar-selling, yen-buying intervention. Japan is left with deposits more than can afford to finance four more interventions of the scale conducted on Sept. 22.
Even if it were to intervene, Japan likely won't have to sell U.S Treasury bills and tap this deposit for the time being, said Izuru Kato, chief economist at Totan Research, a think-tank arm of a major money market broker firm in Tokyo.
If the deposits dry up, Japan would need to dip into its holdings of around $1.04 trillion.
The most liquid foreign assets that Japan holds are the ones that can be converted into cash immediately.
Other forms included gold, reserves at the International Monetary Fund IMF reserve and IMF special drawing rights SDR. However, procuring dollar funds from these assets will take time, analysts say.