Japan likely sold U.S. Treasuries to fund record yen intervention
Digital FinanceMacro
Japan likely sold a portion of its U.S. Treasury holdings to finance its currency intervention over the past month, as its foreign reserves posted their largest decline in August. Tokyo's reserve assets totaled approximately $1.21 trillion at the end of August, down 6.2% from a month earlier, marking their lowest level since October 2022. Foreign security holdings, which include Treasuries, fell by $87.77 billion to $839.56 billion from July-end. Japan spent 15.4 trillion yen, over $98 billion, on yen intervention between July 30 and August 26, its biggest such operation in a single month, with part conducted jointly with the U.S. Akari Nishimura, economist at the Japan Research Institute, told Bloomberg News that while Japan still has room to intervene given its securities holdings, selling U.S. Treasuries to fund further intervention could attract pressure from the U.S., making it difficult for the finance ministry and Bank of Japan to act going forward.
