Federal Reserve foreign counter-purchase balances rose to their highest since October 2022

ON 21 AUGUST, THE USE OF THE FEDERAL RESERVE ' S REPURCHASE TOOL (RRP), WHICH IS OPEN TO FOREIGN CENTRAL BANKS AND OTHER MONETARY AUTHORITIES, CONTINUED TO CLIMB, WITH THE BALANCE INCREASING FOR TWO CONSECUTIVE WEEKS, REFLECTING THE CONTINUED INCREASE IN THE DOLLAR ' S CASH RESERVES BY OFFICIAL OVERSEAS AGENCIES. AS AT 19 AUGUST, THE SIZE OF FOREIGN ENTITIES IN THE FED ' S REVERSE PURCHASE POOL HAD RISEN TO $373 BILLION, UP FROM $357 BILLION A WEEK EARLIER. SINCE 5 AUGUST, THE USE OF THE TOOL HAS INCREASED CUMULATIVELY BY SOME $56 BILLION, REPRESENTING THE LARGEST INCREASE OF TWO WEEKS SINCE OCTOBER 2022. THE MARKET IS FOLLOWING CLOSELY THE EVOLUTION OF THE REVERSE PURCHASE BALANCE OF FOREIGN COUNTRIES IN ORDER TO FIND OUT WHETHER JAPAN IS REGAINING THE LIQUIDITY OF THE UNITED STATES DOLLAR AFTER LAST MONTH ' S INTERVENTION IN THE MARKET TO SUPPORT THE YEN。