Japan's FX Reserves Slip Below $1 Trillion After Record Yen-Buying Intervention

Japan's foreign currency reserves fell to $994.9 billion at the end of August, down from $1.09 trillion in July, dropping below the psychologically significant $1 trillion threshold. The decline followed a surge in yen-support operations. The Ministry of Finance reported record intervention of ¥15.3993 trillion (about $96.5 billion) in yen buying between July 30 and August 26, the largest monthly total on record. To fund the purchases, Japan sold down foreign securities holdings, largely U.S. Treasuries. Foreign securities assets declined by $87.8 billion month over month at end-August, broadly in line with the scale of intervention. Total official reserve assets, including gold, special drawing rights and IMF reserve positions, were about $1.287 trillion at end-July. Intervention activity has also accelerated for the year. Cumulative operations in 2026 have now exceeded ¥27 trillion, surpassing prior annual records. One notable feature in the data is direct U.S. participation. On July 31, U.S. and Japanese authorities carried out a coordinated yen-buying intervention, the first joint operation in roughly 28 years; the previous instance dates back to the late 1990s during the Asian financial crisis. For markets, the scale of Japan's sales matters. As the largest foreign holder of U.S. Treasuries, a $87.8 billion reduction in foreign securities in a single month is meaningful for fixed income. Continued selling at a similar pace could add upward pressure to U.S. Treasury yields as investors weigh uncertainty around Federal Reserve policy.