The U.S. Treasury's July yen purchase amounted to a mere 0.52% of Japan's total summer intervention, according to data released by the New York Fed on Thursday. The disclosure highlights the scale of Tokyo's currency market operations compared to Washington's limited involvement.
The New York Fed reported that the U.S. purchased ¥79.4 billion on July 31, while Japan's separate purchases during its three-day intervention campaign totaled ¥15,399.3 billion. This means Japan's disclosed commitment was approximately 194 times larger than the American purchase. The comparison uses yen amounts to avoid currency-conversion assumptions.
The disclosure comes as the yen once again tests the 160-per-dollar level. Reuters reported on Friday that the yen crossed 160 overnight for the first time since early September. Finance Minister Satsuki Katayama renewed Japan's warning that Tokyo was ready to act again if necessary.
Breakdown of Summer Yen Purchases
Japan's intervention campaign spanned three days: July 30, July 31, and August 3. The largest operation occurred on July 30, accounting for 51.8% of the total campaign. The Finance Ministry published the daily breakdown on November 9, revealing purchases of ¥7,975.6 billion on July 30, ¥5,552.3 billion on July 31, and ¥1,871.4 billion on August 3.
All three operations involved selling dollars and buying yen. The U.S. purchase on July 31 was a separate transaction, executed by the New York Fed as the Treasury's fiscal agent. The Treasury financed the purchase by selling euros from the Exchange Stabilization Fund (ESF).
The 0.52% ratio compares Washington's purchase with Japan's full summer total. If compared only with Japan's July 31 operation, the ratio rises to 1.43%, illustrating how the comparison period significantly affects the result.
Treasury's Currency Holdings Shift
The New York Fed's third-quarter report, released November 12, shows that Treasury's euro holdings fell by approximately $0.5 billion, while yen holdings rose by $0.7 billion. As of September 30, the ESF held $12.6 billion in euros and $6.5 billion in yen. These figures reflect reporting-date dollar valuations, and exchange-rate translation and investment returns also affect the balances.
The Treasury states that every ESF operation requires explicit authorization from the secretary, who oversees U.S. international monetary and financial policy. The fund holds dollars, foreign currencies, and Special Drawing Rights, and can be used to trade currencies and finance foreign governments.
Japan's Intervention Framework
Japan uses its Foreign Exchange Fund Special Account to intervene in currency markets. The Bank of Japan explains that the finance minister authorizes operations and directs the central bank to carry them out. Dollar holdings in the account fund yen purchases when authorities act against depreciation. The central bank also collects market information daily for the ministry, which uses it to decide whether to intervene.
The operational framework allows the Bank of Japan to entrust execution to foreign monetary authorities acting as its agents. Tohru Sasaki, chief strategist at Fukuoka Financial Group and a former Bank of Japan official, told Reuters, "There have been several cases of coordinated intervention, but always the US didn't spend so much money."
As the yen hovers near the 160 level, market participants are watching for potential further intervention. Washington's limited participation in July raises questions about whether the U.S. would approve another yen purchase if Japan seeks support, and how much it would commit.
