🇯🇵 BREAKING: Japan just torched its reserves at the fastest pace since record-keeping began, selling off $87.8 BILLION in foreign securities to defend a collapsing yen.
Japan's total foreign reserves plunged $79.6 billion, down 6.18%, to $1.208 trillion, the sharpest monthly drop since Ministry of Finance records started in 2000. This is now the fourth straight month of decline, breaking the previous record set just three months ago in May.
The trigger: Tokyo spent ¥15.4 trillion, roughly $98.7 billion, on currency intervention between July 30 and August 26, the largest single-month intervention operation on record.
The yen had cratered to a 40-year low near 164 per dollar. The intervention clawed it back to as strong as 155.20, before it drifted back toward 160 and settled around 155-156 in early September.
Here's what makes this genuinely significant for US markets. Roughly 70% of Japan's reserves sit in foreign securities, overwhelmingly US Treasuries bought decades ago. To fund this intervention, Tokyo had to actually sell those Treasuries, injecting fresh supply into a bond market Washington is simultaneously trying to stabilize through its own buyback program.
This wasn't Japan acting alone either. Part of the operation was coordinated jointly with the US, the first joint intervention between the two countries since 2011. Tokyo and Washington have also flagged that Japan could tap a COVID-era Fed dollar facility going forward, a way to raise liquidity without dumping more Treasuries directly onto the market.
The world's largest foreign holder of US debt just proved it will sell that debt under pressure, right as America's own bond market is already under historic strain.
#Japan #Yen #Treasury #Forex #Markets
Japan's total foreign reserves plunged $79.6 billion, down 6.18%, to $1.208 trillion, the sharpest monthly drop since Ministry of Finance records started in 2000. This is now the fourth straight month of decline, breaking the previous record set just three months ago in May.
The trigger: Tokyo spent ¥15.4 trillion, roughly $98.7 billion, on currency intervention between July 30 and August 26, the largest single-month intervention operation on record.
The yen had cratered to a 40-year low near 164 per dollar. The intervention clawed it back to as strong as 155.20, before it drifted back toward 160 and settled around 155-156 in early September.
Here's what makes this genuinely significant for US markets. Roughly 70% of Japan's reserves sit in foreign securities, overwhelmingly US Treasuries bought decades ago. To fund this intervention, Tokyo had to actually sell those Treasuries, injecting fresh supply into a bond market Washington is simultaneously trying to stabilize through its own buyback program.
This wasn't Japan acting alone either. Part of the operation was coordinated jointly with the US, the first joint intervention between the two countries since 2011. Tokyo and Washington have also flagged that Japan could tap a COVID-era Fed dollar facility going forward, a way to raise liquidity without dumping more Treasuries directly onto the market.
The world's largest foreign holder of US debt just proved it will sell that debt under pressure, right as America's own bond market is already under historic strain.
#Japan #Yen #Treasury #Forex #Markets
