Japan Holds Reserves for Further Yen-Buying Interventions

The Government of Japan maintains enough foreign exchange reserves to execute multiple large-scale yen-buying interventions similar to the historic operations conducted in July 2026. According to analysis from Goldman Sachs, Japan holds approximately $1 trillion in U.S. dollar reserves, with $200 billion currently available as cash or cash equivalents.

To increase liquidity, the Japanese government intends to use the Federal Reserve System's Foreign and International Monetary Authorities repo facility. This mechanism allows Japan to raise dollar cash against its Treasury holdings, potentially making the entire $1 trillion reserve available without necessitating the sale of Treasuries on the secondary market.

These capabilities follow a joint intervention by the United States and Japan in late July, marking the first such cooperation since 1998. That action occurred as the yen neared a 40-year low of 164 per dollar. Analysts indicate that future interventions could be triggered by potential misses in U.S. economic data or the carry differential between Japanese and U.S. borrowing rates.