-- Fresh data on the Federal Reserve’s various accounts hints at two potential ways Japanese policy makers may have funded currency interventions this past week to bolster the beleaguered yen.One source may have been a Fed facility where central banks stash overnight cash to earn a market rate. The amount held in this pool — the Fed’s foreign reverse repurchase agreement facility — as of May 1 was down about $8 billion from a week earlier, to $360 billion, figures from the central bank show.
“They hid the intervention well,” said Gennadiy Goldberg, head of US interest rates strategy at TD Securities. “They must have prepared for it in advance by not rolling something and keeping lots of money in cash.”On Monday, a holiday in Japan, the yen fell to a fresh 34-year low of 160.17 per dollar before sharply rebounding in thin trading. On Wednesday following the conclusion of the Fed’s two-day policy meeting, the yen abruptly rallied more than 3% in the waning hours of the US trading day.
However, Japanese officials didn’t tap that Fed facility in a previous round of currency intervention in 2022, and most of the cash has been untouched for a decade, Citigroup Inc. strategists wrote in a note last month. As a result, they expected some sales of front-end Treasury bills or coupons if an intervention occurred.AI Is Helping Automate One of the World’s Most Gruesome Jobs
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