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Bessent says he is ready to repeat joint yen intervention
He urged the Fed to expand its FIMA repo backstop, which can provide up to $60 billion in dollar loans to foreign authorities for up to seven days.
U.S. Treasury Secretary Scott Bessent said he will not hesitate to repeat a coordinated foreign exchange intervention with Japan aimed at countering disorderly yen moves, and he called for a larger Fed backstop for foreign central banks. According to Reuters, Bessent said the Fed's Foreign and International Monetary Authorities lending facility, the FIMA Repo Facility, was used in the coordinated action on Friday, a point confirmed by Japan's finance ministry and President Donald Trump.
The FIMA facility, created by the Federal Open Market Committee during the COVID-19 pandemic, allows countries that hold Treasury securities at the New York Fed to borrow up to $60 billion in U.S. dollars for as long as seven days. Bessent said the facility should be upsized in the coming months. Reuters also notes that expanding or changing the facility would require Federal Open Market Committee approval, and that Fed policymakers are not expected to meet again until mid-September, though inter-meeting conference calls could be held during financial stress. The report adds that Japan held $1.14 trillion of Treasuries as of the end of May, and foreign central banks and monetary authorities have just under $3 trillion deposited at the New York Fed, about $2.65 trillion of it in Treasuries.