Japan’s foreign currency reserves fell to $994.9 billion at the end of August, down from $1.09 trillion in July. That’s a nearly $100 billion drawdown in a single month, and it pushes Japan’s forex war chest below the psychologically important $1 trillion mark for the first time in recent memory.
The culprit is no mystery. Japan’s Ministry of Finance reported a record ¥15.3993 trillion, roughly $96.5 billion, in yen-buying interventions between July 30 and August 26. That figure represents the largest monthly intervention total ever recorded by Japanese authorities.
Where the money came from
To fund the buying spree, Japan liquidated a significant chunk of its foreign securities portfolio, predominantly US Treasuries. Holdings of foreign securities dropped $87.8 billion month-over-month at the end of August, almost perfectly matching the scale of the intervention.
Total official reserve assets, which include gold, special drawing rights, and IMF reserve positions alongside foreign currency, had stood at approximately $1.287 trillion at the end of July.
Cumulative interventions throughout 2026 have now exceeded ¥27 trillion, surpassing all previous annual records.
A rare US-Japan team-up
Perhaps the most eyebrow-raising detail buried in the data is that the US participated directly. On July 31, American and Japanese authorities conducted a coordinated yen-buying intervention, the first such joint operation in approximately 28 years.
The last time the two countries jointly intervened in the yen market was in the late 1990s, during the Asian financial crisis.
What this means for markets
Japan is the largest foreign holder of US Treasuries, so the liquidation of $87.8 billion in foreign securities in a single month is not a trivial event for fixed income markets. If these sales continue at anywhere near this pace, they could put upward pressure on US Treasury yields at a time when the bond market is already navigating uncertainty around Federal Reserve policy.