Japan may sell U.S. bonds to boost yen

It appears that Japan sold part of its holdings of foreign securities, including U.S. Treasury bonds, during the past month to finance its intervention in the forex market to support the yen. Its foreign holdings decreased by approximately $87.8 billion by the end of August, depleting a significant portion of its reserves, which stood at $995 billion, alongside a noticeable decline in foreign currency deposits. This intervention was aimed at protecting the national currency and was carried out in cooperation with the United States, with Japan spending a record monthly amount of 15.4 trillion yen (about $98.6 billion). Data shows that around 70% of Japan’s foreign exchange reserves are invested in U.S. Treasury bonds, with indications of the possibility of repeating such interventions through the sale of U.S. bonds in the future—especially amid increasing tensions in global bond markets and widespread actions by the U.S. Treasury to reduce long-term yields.

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