By Dumping US Treasuries to Prop Up the Yen, Japan’s Foreign Currency Reserves Plunged by $95 Billion in August. But Don’t Cry for Japan. These Interventions Are Hugely Profitable
The government is already busy fighting over what to do with the $31 billion in profits on its foreign exchange interventions last fiscal year.
Source: Wolf Street
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DW NOTE
Japan sold dollars at ¥161 and will buy them back at ¥140. The Ministry of Finance books the difference as profit — ¥21 per dollar on $95 billion is real money, even before you count the Treasury coupon income while they held the position. Tokyo's politicians are already squabbling over how to spend last year's ¥4.7 trillion in FX gains. Hard to lose when you print one side of the trade.