Japan Boosts Intervention Power with $1 Trillion Fed Facility

Japan's ability to intervene in the foreign exchange market has been bolstered by access to a Federal Reserve facility that can provide up to $1 trillion in liquid funds, according to Goldman Sachs. The Bank of Japan holds about $200 billion in cash reserves for yen-buying interventions, which could sustain several rounds like last month's historic effort.

The recent gains of the yen after intervention have faded, and future actions depend on interest rate differences between Japan and the U.S. If the BOJ delays rate hikes, the yen may weaken further, increasing chances of more intervention, according to Goldman Sachs.