Japan Unleashes Record Selloff of Foreign Securities to Defend Yen

Japan's Ministry of Finance has been busy defending the yen against a slide toward 40-year lows against the US dollar. To do this, they've sold off a massive amount of foreign securities, including a significant portion of their estimated $1.1 trillion to $1.24 trillion in US Treasuries.

The selloff was the largest on record for Japan, with a staggering $75.6 billion in foreign securities sold in May alone. This sale helped fund yen-buying interventions through late May, resulting in the sale of ¥11.73 trillion ($73.4 billion) worth of foreign assets.

Japan's foreign reserves fell by 5.6%, landing at $1.306 trillion, with foreign securities within that portfolio slipping to $931.7 billion.

To navigate this tension, Japanese authorities turned to the Federal Reserve's FIMA repo facility, which allows foreign central banks to pledge Treasury collateral in exchange for dollars without actually selling bonds on the open market.