Japan just pulled off one of the most expensive currency defenses in modern history, and the bill came due in the form of a record selloff of foreign securities, including a significant chunk of US Treasuries.
The Ministry of Finance sold ¥11.73 trillion ($73.4 billion) worth of foreign assets to fund yen-buying interventions through late May.
The numbers behind the fire sale
Japan’s foreign securities holdings dropped $75.6 billion in May alone, the largest single-month decline on record for the country. Total foreign reserves fell $77.1 billion, or 5.6%, landing at $1.306 trillion. Foreign securities within that portfolio slipped to $931.7 billion.
Japan remains the single largest foreign holder of US Treasuries, with estimated holdings somewhere between $1.1 trillion and $1.24 trillion. Analysts peg roughly 70% of Japan’s reserves as sitting in US government debt, which means any aggressive selling by Tokyo has the potential to ripple through the world’s most important bond market.
