Japan Likely Sold Treasuries to Fund Yen Rescue

Japan appears to have sold part of its stockpile of US Treasuries to pay for the largest currency intervention in its history, according to Finance Ministry data released Monday and reported by Bloomberg, Reuters and the Japan Times.

Tokyo's holdings of foreign securities fell by $87.8 billion at the end of August from a month earlier — close to the scale of the intervention itself. Market participants estimate roughly 70% of Japan's reserves are held in US Treasurys.

That matters to Americans because Treasury sales by the world's biggest foreign holder of US debt push yields up — and yields set the price of mortgages, car loans and the government's own borrowing.

The Numbers

Reuters reported total reserves stood at $1.208 trillion at the end of August, down a record $79.6 billion, or 6.18%, from $1.287 trillion a month earlier. The Japan Times reported foreign currency reserves fell $94.6 billion to $995 billion, and that foreign currency deposits — another potential source of intervention cash — fell $6.9 billion.