US-Japan Yen Intervention: Buying Time for Japan's Treasury Holdings

The US and Japan have conducted a rare coordinated intervention to support the yen in late July.

Japan confirmed on Monday that both sides will not hesitate to conduct further coordinated interventions if needed.

The core issue is that Japan holds about $1.14 trillion in US Treasuries, which could be destabilizing for US financial markets if sold to finance currency intervention.

To mitigate this risk, Washington introduced the FIMA Repo Facility, allowing Japan to use its Treasury holdings as collateral to obtain US dollar funding from the Federal Reserve without selling the bonds on the open market.