Foreign Treasury Holdings Hint at Yen Intervention Funding
Fresh data on the Federal Reserve’s various accounts hints at how Japanese policy makers may have further funded currency interventions to bolster the beleaguered yen.
Central banks’ holdings of US securities fell by about $10.6 billion, leaving total holdings at $2.95 trillion, data as of May 8 show. Meanwhile, monetary officials stashed $362 billion at the Fed’s reverse repurchase agreement facility, up from $360 billion a week earlier, according to the latest data from the central bank. The figures showing the cash drain cover a week that included at least another instance where Japanese policymakers likely intervened in foreign-exchange markets to support the yen, which is the weakest Group-of-10 currency this year versus a broadly strengthening dollar. On April 29, a holiday in Japan, the yen fell to a fresh 34-year low of 160.17 per dollar before sharply rebounding in thin trading. Following the conclusion of the Fed’s two-day policy meeting three days later, the yen abruptly rallied more than 3% in the waning hours of the US trading day.
Last week, data from the prior reporting period showed a $17.8 billion drop in balances in a separate cash account used by central bankers, suggesting these funds may have been tapped to prop up the currency at some point. However, historically, Japanese authorities haven’t stockpiled their intervention resources at the Fed’s non-interest-bearing foreign official deposits category, according to Wrightson ICAP. That points to the possibility that the latest drop in foreign central bank Treasury holdings may have also been used in efforts to support the yen.
The Ministry of Finance has refrained from confirming interventions, but a Bloomberg analysis of Bank of Japan accounts suggest interventions took place.(HFS all you have to do is look at the fuckin’ chart to see it both times….NOT rocket science and they sound like the people who don’t think Ag is manipulated when 10k contracts just ‘materialize’ on the sell side at the NYMEX open then whoosh! down it goes)The estimates indicate that policymakers likely spent some ¥9 trillion last week, or nearly $60 billion at current exchange rates, to bolster the currency — an amount on par with previous interventions that last took place in the fall of 2022.
https://www.bnnbloomberg.ca/foreign-treasury-holdings-hint-at-yen-intervention-funding-1.2071190
https://tradingeconomics.com/japan/currency
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