U.S. Treasury Secretary Scott Bessent is asking the Federal Reserve to expand a lending facility called the FIMA Repo Facility to allow Japan to support its currency without disrupting the U.S. Treasury market. The yen hit its weakest level since 1986 last week, nearing 164 yen per dollar, before the United States joined Japan in foreign exchange intervention. Japan holds approximately $1.1 trillion in U.S. Treasuries and its recent interventions are estimated at $60 to $80 billion. New Fed Chairman Kevin Warsh appears open to this increased cooperation with Treasury, having signaled he wants to rewrite the relationship between the two institutions known as the Treasury-Fed Accord.
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