The US Treasury Department just did something it hasn’t done in over a decade. On August 1, it stepped directly into foreign exchange markets, buying Japanese yen in a coordinated operation with Tokyo that marked the first American forex intervention since the G7’s 2011 effort to stabilize the yen after Japan’s earthquake and tsunami.
It was also the first time the US had bought yen since 1998.
What actually happened
Treasury Secretary Scott Bessent, the former hedge-fund manager, authorized the purchase of yen using an estimated $5-10 billion in funds. The money came from euro sales routed through the Federal Reserve’s FIMA facility, a mechanism that lets foreign central banks swap their holdings with the Fed.
Japan, for its part, went considerably bigger. Tokyo’s total yen purchases on the day reached approximately $36 billion, dwarfing the American contribution.
