Japan Has 'Plenty of Capacity' for Further Yen Interventions: Goldman Sachs

Japan has significant reserves to intervene in the yen market again, according to Goldman Sachs. The country's $1 trillion U.S. dollar reserves have about $200 billion in cash or cash equivalents, which could be used for further intervention.

Karen Fishman, a Goldman Sachs Research strategist, estimated that Japan would need at least another couple of rounds of interventions similar to the historic one last month, which was near-record size and involved around $85 billion. The access to the Fed's FIMA repo facility makes all $1 trillion available in liquid form.

Japan has used this facility to raise dollar cash against its Treasury holdings, avoiding dumping Treasuries on the secondary market to fund intervention. This has already shifted sentiment, with clients becoming more bullish on the yen last week once the Fed facility put the full $1 trillion within reach for intervention.