Japan is making significant moves in the financial markets by selling off billions of dollars in US Treasury securities as part of its efforts to stabilize its weakening currency. Recent data from the US Treasury Department reveals that Japan sold $22 billion worth of Treasury securities in May, reducing its holdings to $1.1283 trillion. This marks the second consecutive month of large-scale sell-offs, following an initial sale of $37.5 billion in April.
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Carry Trade Japan YEN Impact
US going to recession
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The primary motivation behind this sell-off is Japan’s attempt to curb the sharp decline of the yen against the US dollar. In the past month alone, Japan has spent $36.6 billion to counteract speculative attacks on the yen, as reported by Bloomberg. The Japanese government is determined to keep speculators at bay, as evidenced by its currency interventions in April and May, followed by another round in July.
What will be NVIDIA Corp ‘s bottom?
Carry Trade Japan YEN Impact
US going to recession
Bank of Japan #carryTrade #Hardlanding
Buffalo In Water #option #trading #bankniftycalls #bankniftyanalysis #buy #call #niftybank #NASDAQ #BerkshireHathaway stake pic.twitter.com/qgL0NcCKiB— ☬ jagdeep singh ☬ (@reactbitcoin) August 4, 2024
These interventions seem to be yielding some positive results. The yen’s weakness has started to reverse, partly due to growing speculation that the significant interest rate gap between Japan and the US might begin to close. Despite the ongoing efforts, Japan is not expected to provide further details on its currency intervention strategies until November. However, upcoming data on foreign reserves, expected to be released next week, might offer insights into whether the government is utilizing its Treasury sales to fund its yen purchases directly.
Key Points:
- Japan sold $22 billion in US Treasury securities in May, reducing holdings to $1.1283 trillion.
- This is the second consecutive month of significant sell-offs, with $37.5 billion sold in April.
- The sell-off aims to support the weakening yen against the US dollar.
- Japan spent $36.6 billion last month to counter speculators betting against the yen.
- Recent interventions have begun to reverse the yen’s decline, possibly due to anticipated changes in interest rate differentials between Japan and the US.
- Further insights into Japan’s currency intervention efforts are expected in November, with foreign reserve data to be released next week possibly shedding more light on the situation.
Lap Fu Ip – Reprinted with permission of Whatfinger News
