US Treasury Intervenes in Foreign Exchange Market to Support Yen and US Bonds

The US Treasury intervened in the foreign exchange market for the third time since 1998 by buying Japanese yen. This move was confirmed by Treasury Secretary Scott Bessent, who stated that the action 'countered disorderly yen movements.' The intervention aimed to prevent further depreciation of the yen against the dollar.

Before the intervention, the yen was trading at 40-year lows versus the dollar. Some analysts believe that rising yields in the US Treasury bond market are driving Bessent's actions, as Japan holds $1.15 trillion in Treasuries, making it the largest foreign holder on earth.

The FIMA (Foreign and International Monetary Authority) repo facility is being used to help Japan accomplish these interventions. This program allows nations to borrow dollars against their Treasury holdings instead of selling them, which helps prevent a rise in US yields.