Japan Unloads US Treasuries to Fund Record Yen Defense Efforts

The Japanese government has sold US Treasuries to fund its record yen defense efforts. Figures from Tokyo's Finance Ministry show that the country's holdings of foreign securities were lower by $87.8 billion as of August compared to July.

This decline in foreign securities is consistent with the scale of Japan's intervention to prop up its currency, which totaled a record ¥15.4 trillion ($98.6 billion) over the period ending August 26. The country collaborated with the US on this effort.

While it's not clear what specific Treasuries were sold, traders estimate that around 70% of Japan's foreign reserves are held in these securities. However, prices for 10-year Treasuries only dipped slightly at the end of August compared to July, indicating minimal valuation effects and suggesting actual sales drove most of the decline.

Japan still holds $995 billion in foreign currency reserves as of August, demonstrating its ability to intervene again if needed. Finance Minister Satsuki Katayama has also highlighted the Foreign and International Monetary Authorities Repo Facility as an option for future actions, allowing Japan to secure up to $60 billion per day without selling Treasuries.