Global Markets Comment A Few Follow Up Questions on Yen Intervention

Economics Research 6 August 2026 | 10:01PM BST

Global Markets Comment: A Few Follow-Up Questions on Yen Intervention

We address a few common questions in response to our Q&A on Yen Intervention. We are Michael Cahill | skeptical of arguments that this is negative for the Dollar’s reserve status, and we think the Goldman Sachs International FIMA facility can be useful for both sides and actually helps reinforce the Dollar’s appeal. William Marshall We expect temporary and limited effects from FIMA facility usage on broader markets, but | all else equal it should support easier USD funding conditions on the margin. And while it is Goldman Sachs & Co. LLC

impossible to say for sure, we think we are still in the same dynamic as in February following Karen Reichgott Fishman | the last round of coordinated action, where a weaker Yen is a prerequisite for much faster Goldman Sachs & Co. LLC rate hikes, so there is a tension between the current value of the Yen and market pricing for the next few BoJ meetings. Isabella Rosenberg | Goldman Sachs & Co. LLC Q1: Can Treasury’s actions undermine the appeal of Dollar reserves? Lexi Kanter | Some commentators have argued that the US administration’s more activist and Goldman Sachs & Co. LLC enterprising approach to prevent unwanted volatility in the Treasury market could undermine confidence in holding Dollar reserve assets. While we certainly share the view that policy uncertainty and unconventional institutional actions can weigh on the Dollar’s global role, and this was a central feature of our bearish Dollar view in 2025, we think applying that argument in this circumstance is a stretch.

At its core, this view relies on an assumption that Treasury’s willingness to help Japan facilitate Treasury sales right now implies that it might be willing to hinder a reserve manager from making similar sales in the future. This seems like quite a leap.

Other than some special considerations due to its size, Japan’s recent ability to access its Dollar reserves is not unique. For example, in March of this year, even when there were signs of strain in markets, a range of reserve managers sold significant quantities of Treasuries in order to support their currencies, and Treasury did not publicly object. We think episodes like this of forced sales actually help reinforce the Dollar’s role over time.

We are also far from persuaded that Treasury’s intervention signals new fragilities in the Treasury market relative to before. As we noted in our original piece, we think it simply shows that this administration is more willing to intervene than in the recent past. But willingness does not equate to necessity. Market functioning metrics have all been normal, higher oil prices and more dovish FOMC risks were responsible for recent weakness in the back end of the Treasury curve, and there are no signs that the safe-haven appeal of Dollar assets has changed in a structural way in global bouts of risk-off. Some of last year’s Dollar depreciation can be attributed to other types of investors hedging the portfolio risk that arose from shifting Dollar correlations, but that has stopped and the story for reserve managers is more nuanced. And we think it is important to keep in mind that US Treasury officials used

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to be much more hands-on prior to the late 1990s. The Dollar has maintained its status through both types of management.

If anything, Japan’s ability to access the Fed’s FIMA facility to help ensure smoother sales at a large scale, if necessary, highlights a key structural advantage of Dollar reserves. Having facilities like this, even if not originally intended for this purpose, is unique to the US Dollar—depth of capital markets that allows for reserve accumulation in calm markets, and liquidity assistance in the capital markets that allows for reserve access in times of stress.

Japan is seeing some benefits to holding its reserves largely in Dollar assets. In contrast, some other…