J.P. Morgan: The U.S. Treasury has limited funds available, and subsequent collaboration with Japan to support the yen will be constrained.

J.P. Morgan stated that the liquidity resources available for a new round of coordinated forex market intervention with Japan by the U.S. Treasury are limited; however, if the U.S. employs unconventional measures, the scale of intervention funds is expected to significantly expand. Strategists including Junya Tanase wrote in a research report that as of June, the U.S. Treasury's currency stabilization fund holds about 13 billion in assets and $25.5 billion in assets. Compared to the scale of Japan's interventions from 2022 to 2026, the current fund size is relatively small. J.P. Morgan noted that the U.S. Treasury can significantly expand its intervention ammunition by monetizing its holdings of Special Drawing Rights from the International Monetary Fund and swapping foreign currency assets for U.S. dollars. In this scenario, the Treasury could theoretically mobilize up to $187 billion; if the Federal Reserve participates in the action, the scale of intervention is expected to potentially double. The strategists wrote: "Nevertheless, we believe the U.S. Treasury cannot conduct intervention operations without limits. The funding size of the currency stabilization fund is limited, and if new funds are needed, it is likely to require appropriations from Congress." The report indicated that the scale of past U.S. forex market interventions typically ranged from $1 billion to $2.5 billion, which is far lower than the liquidity assets currently held by the Treasury in U.S. dollars and euros.