Yen Intervention Risk Puts Focus on Fed's Swelling Cash Pile.

CITIGROUP Inc.; BOARD of Governors of the Federal Reserve System (U.S.); TREASURY bills; ASSET management accounts; FOREIGN exchange intervention (Monetary policy); REPURCHASE agreements; GOOD Friday; FOREIGN banking industry

Japanese authorities may need to sell Treasuries rather than using cash from the Federal Reserve to support the struggling yen, according to Citigroup. The use of the Fed's foreign reverse repurchase agreement facility has increased by $32 billion in the past three weeks, leading to speculation that Japan was boosting its dollar cash holdings in preparation to bolster the yen. However, Citigroup suggests that the increase in funds is likely temporary and related to quarter-end and a long US holiday weekend. If intervention in the yen surpasses 152 per dollar, Citigroup expects Japanese officials to sell front-end T-bills or coupons. [Extracted from the article]

Copyright of Bloomberg.com is the property of Bloomberg, L.P. and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)