Japan is trying to save its currency, the yen, by selling off billions of dollars worth of US government bonds.
Dumping US Treasuries
In May, Japan unloaded a whopping $22 billion in US Treasury securities. This follows a similar move in April, where they sold off $37.5 billion. These sales have significantly reduced Japan’s holdings of US Treasuries to $1.1283 trillion.
Fighting the Yen’s Fall
The yen has been taking a beating against the US dollar. To counter this, Japan has been spending big bucks to buy yen and support its value. In the past month alone, they’ve spent $36.6 billion trying to keep the yen from falling further.
Speculation and Rate Differentials
The yen’s weakness has attracted speculators who are betting against it. Japan is trying to stop these speculators in their tracks. The government is also hoping that the gap between interest rates in Japan and the US will start to close, which could help the yen.
More to Come?
Japan won’t be sharing details about their currency intervention efforts until November. However, we might get some clues next week when they release data on their foreign reserves. This data could reveal if they’re using the money from their Treasury sales to buy yen.
