Japan's foreign reserves are in decline as the country is trying to support the Yen by dumping the US dollars in the market. As a result, its foreign reserves of Japan have reached $1.19 trillion, as around $43.5 billion were spent to support Yen. This data was shared by the Ministry of Finance from Japan.
Overall, this is the 2nd consecutive month in which Japan's foreign reserves are in decline. In September, around $54 billion were removed from the reserves in an attempt to support Yen. According to experts, such a market intervention was not seen since 1998, which shows the severity of the situation.
Just this year, Yen has almost 27% of its value due to the aggressive rate hikes from the Fed, which is making the USD stronger. In general, high-interest rates can attract foreign investors to a currency, thus making it stronger.
In the USA, multiple successive rate hikes have been done by the Fed to combat inflation. On the other hand, the interest rates set by the Bank of Japan are still at -0.1% (negative).
However, this has not stopped Japan from trying to prop up the Yen against the USD and other currencies. Besides market interventions, Tokyo is also attempting to control import costs which can also make the Yen weaker.
As for how successful Japan was in making the Yen stronger, it seems that the results are not so impressive. Right now, the rate of USD/JPY is around 146.22, which is a lot higher than the rate seen during the Trump era.
This leads us to another question of how far the Bank of Japan can go to support the Yen. At the end of the day, the country will have to deplete its USD reserves to support the Yen. However, this move could help the country control inflation as well, so that's a plus side to this whole ordeal too!