Bessent Urges Fed to Expand FIMA Facility Amid US-Japan Currency Intervention

U.S. Treasury Secretary Scott Bessent has made a rare public call on the Federal Reserve to expand its FIMA Repo Facility, which would allow Japan to borrow dollar liquidity using its U.S. Treasuries as collateral.

This move comes after a coordinated U.S.-Japan intervention in the currency market, where Japan bought yen and sold dollars to stabilize the currency.

Bessent praised the facility as critical support for Japan's actions and explicitly stated that 'we will encourage an expansion of the facility's size in the coming months.'

Market participants note that volatility in U.S. Treasury yields provides a reasonable justification for Fed assistance in smoothing yen intervention operations, given that direct sales of U.S. Treasuries by Japan could exacerbate pressure on the bond market.