Goldman Sachs Says Japan Has $1 Trillion War Chest: More Yen Interventions Coming?

Japan has enough dollar reserves left to intervene in currency markets again, according to Goldman Sachs. The bank estimates Tokyo holds close to $1 trillion in reserves. About $200 billion of that sits in cash or cash equivalents.

That cushion matters because the yen has already given back much of last month's gains. The currency slipped back toward 160 per dollar this week, erasing about half its post-intervention rebound.

Why Goldman Sees Room to Act Again

Goldman Sachs strategist Karen Fishman discussed this on the bank's Exchanges podcast. She said Japan would not need most of that pool to match July's operation.

She also pointed to the Federal Reserve's FIMA repo facility, which lets central banks borrow dollars against Treasury holdings. That access could make the full $1 trillion available and spare Japan from selling bonds on the open market.

That backstop already shifted trader sentiment last week. Once clients saw the facility could unlock the full reserve pool, they grew more confident on the yen. Praneet Shah, Goldman's head of foreign exchange options trading, made the point on the podcast.

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