Japan Likely Sold Treasuries to Fund Record Yen Intervention

Japan's recent yen intervention has sparked interest in how the country financed its record-breaking campaign. According to reserve data, Japan likely sold part of its U.S. Treasury portfolio to fund the intervention.

The data shows that foreign securities held in Japan's reserves fell by $87.8 billion in August, the largest monthly decline on record. This drop closely matches the $98.6 billion authorities spent buying yen during the month through August 26.

Market estimates suggest approximately 70% of Japan's foreign reserve portfolio is invested in Treasury securities, making short-term Treasuries the most logical assets to sell first.