Japan Likely Sold Treasuries to Fund Record Yen Intervention
- Reserve holdings of foreign securities drops $50 billion
- Willingness to sell US bonds provides Japan with FX firepower
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Japan’s holdings of foreign securities dropped sharply in May, indicating that the government likely financed most of its recent record currency market intervention by selling Treasuries and other foreign securities and still has ample firepower to step into markets again.
The country’s holdings of foreign securities dropped by $50.4 billion in May, finance ministry data showed Friday, following Japan’s ¥9.8 trillion ($62.7 billion) foray into markets to prop up the yen in the past month. As Treasury prices rose last month, the market value of Japan’s foreign securities was expected to rise if assets were left untouched.