Foreign Security Sales in Japan's Foreign Exchange Intervention

Japan significantly reduced its foreign securities holdings, including U.S. Treasury bonds, to finance its record-breaking foreign exchange market intervention last month.

Record Decline in Foreign Securities

According to data released by the Ministry of Finance on Monday, Tokyo's foreign securities holdings dropped by a record $87.8 billion at the end of August compared to the previous month.

This decline occurred at a level quite close to the scale of the intervention recently carried out by Japan to support the new currency.

Assessments on Bond Sales

Analysts suggested that Japan likely liquidated short-term U.S. Treasury bonds to finance the intervention.

While a ministry official stated that the intervention played a role in the drop in foreign exchange reserves, they did not directly confirm the sale of U.S. Treasury bonds.

Historical Spending and Intervention Scale

The Ministry of Finance had previously confirmed that officials spent 15.4 trillion yen during the one-month period leading up to August 26.

This monthly intervention was carried out as part of an operation, partly conducted in coordination with the U.S., holding the distinction of being the largest intervention on record.

Coordinated Steps Between the Two Countries

The U.S. intervened in the market on July 31 as part of the first coordinated move between the two countries since 1998 to support the yen.

Experts stated that this clearly shows both parties are moving in the same direction for now.