Japan sold $90 billion in US bonds to support yen

Japan utilized significant foreign exchange interventions to support the yen, including the sale of approximately $90 billion in US Treasury bonds. Data from the Japanese Ministry of Finance indicates that foreign securities held in Tokyo's reserves fell by $87.8 billion at the end of August compared to the previous month, aligning with the scale of recent currency support operations.

Some of these interventions were conducted in coordination with the United States, marking one of the largest monthly interventions in history. The Ministry confirmed that for the month ending August 26, authorities allocated the equivalent of 15.4 trillion yen, or approximately $98.6 billion, for these actions.

In addition to direct interventions, the yen has seen strength driven by a hawkish shift in rhetoric from the Bank of Japan. Market expectations for monetary policy tightening, including a potential 25 basis point rate hike, have contributed to the currency's appreciation against the US dollar, causing the USD/JPY rate to drop toward the 153.80 level.