Many central banks intervene in foreign-exchange markets. The largest player is
Japan. Between 1991 and 2000, for example, the Bank of Japan bought U.S. dollars
on 168 occasions for a cumulative amount of $304 billion and sold U.S. dollars on
33 occasions for a cumulative amount of $38 billion. A typical case: On April 3,
2000, the Bank of Japan purchased $13.2 billion in the foreign-exchange market in
an attempt to stop the more than four percent depreciation of the dollar against the
yen that had occurred during the previous week. Japan’s intervention magnitudes
dwarf all other countries’ official intervention in the foreign-exchange market. For
example, it exceeded U.S. intervention in the 1991–2000 period by a factor of more
than 30. However, compared to overall market transactions in the foreign-exchange
market, the magnitude of Japan’s interventions has been quite small.