US Treasury's Yen Intervention Firepower May Be Limited by Modest Resources

The US Treasury's ability to support the yen may be limited due to its relatively small liquid resources, according to JPMorgan Chase & Co. The Exchange Stabilization Fund held $13 billion of euro-denominated assets and $25.5 billion of dollar assets as of June.

This amount is modest compared to Japan's intervention operations between 2022 and 2026, which ranged from roughly $35 billion to $60 billion. Strategists at JPMorgan note that while the Treasury's firepower could be expanded substantially if officials resort to more extraordinary measures, its current resources are insufficient for further coordinated currency intervention.

JPMorgan's analysis suggests that the US Treasury may not have enough liquid resources to support significant yen intervention. This assessment is based on the Fund's modest holdings of euro-denominated assets and dollar assets.