Yen Strengthening Gradually Apparent? Citi: Japan's $550 Billion Investment Fund May Trigger "Mini Mar-a-Lago Accord"

``` Citigroup believes that the $550 billion investment fund involved in the US-Japan tariff agreement may give rise to some form of bilateral "mini-Mar-a-Lago agreement," which would lead to a weaker US dollar and a stronger Japanese yen. On September 12, Citigroup analyst Osamu Takashima released a research report pointing out that the source of the $550 billion that Japan plans to invest in the United States may heavily rely on Japan's $1.3 trillion in foreign exchange reserves. The report states: We do not expect a major shift in multilateral monetary policy similar to the 'Mar-a-Lago agreement,' but a bilateral 'mini-Mar-a-Lago agreement' is indeed possible. US Treasuries held by Japan are a key component of its foreign exchange reserves, and the duration of these assets is estimated at 3-5 years. However, the investment fund established under the tariff agreement is expected to invest in US assets with a term of 10-20 years. If Japan finances this long-term investment fund by selling short-term US Treasuries, such capital movement could push up US long-term bond yields. To stabilize the market, the US may pressure Japan to extend the duration of its US Treasury holdings when managing its foreign exchange reserves. Such high-level bilateral coordination to address potential market volatility is the basis of what Citigroup refers to as the "mini-Mar-a-Lago agreement." Citigroup analysts emphasized: We believe that from a monetary policy perspective, there will be a persistent trend toward a weaker US dollar and a stronger Japanese yen. This expectation stands in stark contrast to the recent weak performance of the yen. Due to political uncertainty and tariff issues casting a shadow over the Bank of Japan's rate hike path, the yen has been the worst performer among major currencies over the past three months. Risk warning and disclaimer The market involves risks, and investment should be cautious. This article does not constitute personal investment advice and has not taken into account the specific investment objectives, financial status, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their particular circumstances. Any investment based on this is at your own risk. ```