Federal Reserve intervenes to support Japanese yen amid record debt

Japan's public debt has reached a record high of 1,346,683.3 billion yen, approximately 7,327.3 billion euros, according to the Japanese Ministry of Finance. This massive debt load, which averages roughly 59,579 euros per citizen, continues to grow as the government borrows to manage existing financial obligations.

To support the declining yen, the United States Federal Reserve conducted a significant intervention at the end of July. In a move that surprised the European Central Bank, the Fed sold approximately 28 billion euros from its Exchange Stabilization Fund and SOMA account to purchase yen alongside a Japanese intervention of 8.45 trillion yen.

U.S. Treasury Secretary Scott Bessent reportedly informed ECB President Christine Lagarde of the euro sales only after they occurred. The decision to sell euros rather than dollars was strategic to avoid weakening the U.S. currency and to prevent Japan from selling its massive holdings of U.S. Treasury bonds to fund its own currency interventions, which would have increased U.S. borrowing costs.