Japan Rumored to Be Mulling Crude Oil Futures Market Intervention

Tokyo, March 24 (Jiji Press)–Some market players are speculating that the Japanese government and the Bank of Japan are considering the possibility of intervening in the crude oil futures market. The speculation comes as yen selling pressure is increasing amid expectations that the country’s trade deficit will expand due to soaring crude oil prices reflecting growing tensions in the Middle East. According to market sources, the government and the BOJ have started collecting opinions from financial institutions about the advisability of launching crude oil futures market intervention. They are apparently aiming to check the yen’s depreciation by tackling speculative moves. “It is widely said that speculative moves in the crude oil futures market are also having an impact on the foreign exchange market,” Finance Minister Satsuki Katayama said at a press conference Tuesday. “We will take all possible measures on all fronts at any time,” she said, hinting at the possibility of intervening in the crude oil futures market. Until now, the government and the BOJ have intervened in the currency market to stem wild fluctuations in dollar-yen rates using funds at the state’s foreign exchange special account. The yen has weakened in conjunction with soaring crude oil prices, with the dollar rising close to 160 yen. The Japanese authorities conducted dollar-selling, yen-buying intervention when the greenback climbed past 160 yen in 2024. The government apparently believes that crude oil futures market intervention can indirectly affect the currency market. Under law, it is possible to trade crude oil futures for foreign exchange stability, a government official said. A possible way to lower crude oil futures prices is to place massive sell orders first and then place buy orders when prices fell to offset the trade. But some are skeptical about the effectiveness and feasibility of intervention. “I don’t think (Japan) can intervene” in the oil futures market, an official of a Japanese bank said, adding, “(The authorities) may be trying to issue a warning (to speculative traders) by hinting at the possibility of launching intervention.” Crude oil futures intervention “would undermine the market’s function, so it’s unrealistic,” an official of an asset management company said. “Currency market intervention would be better.” Earlier this month, speculation emerged that the U.S. government may intervene in the crude oil futures market to lower prices. But U.S. Treasury Secretary Scott Bessent ruled out the speculation last week, saying that the U.S. government would deal with rising prices by releasing stockpiled oil. The Japanese government also plans to start releasing state oil reserves on Thursday in an effort to ensure stable supplies and lower prices. END [Copyright The Jiji Press, Ltd.]