Evercore ISI said the Fed’s foreign and international monetary authorities
(FIMA) repo facility is unlikely to sustain prolonged U.S.-Japan intervention to
defend the yen. The facility lets overseas holders use U.S. Treasuries as
collateral to obtain dollars without selling securities in the open market, but
it is capped at $60bn per counterparty per day—only slightly above Evercore’s
estimate of Japan’s one-day intervention last Thursday. Strategists warned a
capped repo could invite market testing of U.S. and Japanese resolve if
defending the yen required large-scale Treasury sales. The facility is designed
to provide short-term liquidity, not durable financing: borrowings must be
rolled to persist and rates are set above private repo costs, signalling it is
not intended for routine or sustained FX intervention.
