This is Part 1 as the subject is complicated, very pertinent, but lengthy in describing!
On a sleepy summer Friday afternoon, smack dab in the middle of the summer doldrums (a time of the year so named as there are many away from their normal perches) US Government Treasury Secretary Scott Bessent along with the Japanese government intervened in the currency market in order to give the Japanese yen aka JPY a jump in strength….
Most interesting Bessent used FIMA (Foreign International Monetary Authority) for the JPY prop up-
“The FIMA Repo Facility allows FIMA account holders, which consist of central banks and other international monetary authorities with accounts at the Federal Reserve Bank of New York, to enter into repurchase agreements with the Federal Reserve. In these transactions, approved FIMA account holders temporarily exchange their U.S. Treasury securities held with the Federal Reserve for U.S. dollars, which can then be made available to institutions in their jurisdictions. This facility provides, at a backstop rate, an alternative temporary source of U.S. dollars for foreign official holders of Treasury securities other than sales of the securities in the open market. A temporary FIMA Repo Facility was established March 31, 2020, and the facility was made a standing facility on July 28, 2021.”
Yaayaa the market purists will question this market intervention move, that is not what this is about! It did happen, likely is a new precedent (will happen again!) so lets discuss, see what it means, why it happened, and prepare for the next time this move is used!
Late morning of the same Friday, from Camp David… Bessent leaves a handwritten note that is crazy descriptive to give market participants a heads up for the coming intervention
From an X/Twitter feed as I am not sure the copyright issues here, but this is posted in a public venue
This is a USD/JPY – Dollar to Yen chart – when going down the Yen is losing value.
Pro-Note- Currencies are one of the least volatile assets under normal circumstances. ie The JPY is going from 164 to mid 155’s
So why does Bessent and company care about the JPY? More to come!
Rather than stuff your inbox with a long, complicated post, I cut this one off… Several GREAT graphs that will show exactly what happened –
Most importantly, the conclusions and what we need to watch for and act on!
Have a Great “FIMA Bessent JPY Part 1 Explained” Day!
John A. Kvale CFA, CFP
AI Content Authenticity: All of the following text content has been completed by myself and has not been edited or created by AI. Occasionally we do use AI for images and will note when appropriate.
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
