The U.S. Treasury announced that it would double the limit on long-term Treasury buybacks from the previous $2 billion to $4 billion or more. Eligible securities are long-term bonds with remaining maturities of 10–20 years and 20–30 years, and the measure will be implemented from 9 September through 4 November. In response, the yen briefly rose into the low ¥158s.
The U.S. Treasury said in its announcement that it would raise the per-operation limit for long-term Treasury buybacks from the previous $2 billion to $4 billion or more. The eligible securities are U.S. Treasury bonds with remaining maturities of 10–20 years and 20–30 years, and the measure will apply from 9 September through 4 November.
In the New York market, concerns that had been driving long-term interest rates higher receded following the announcement, and long-term yields declined. This heightened expectations of a narrowing in the U.S.-Japan interest rate differential, strengthening flows to buy the yen and sell the dollar.
The same trend spread to the Tokyo market, where trading was dominated by yen-strengthening moves. Market participants believe the measure was seen as aimed at stabilizing interest rates by improving liquidity and stimulating demand for government bonds.
The measure is intended to curb the persistent elevation of long-term interest rates. Going forward, the dollar-yen exchange rate is expected to remain affected by U.S. interest rate trends and differences between U.S. and Japanese monetary policy.