---
title: "Is the Japanese yen strengthening? Citigroup: Japan's $550 billion investment fund may trigger a \"mini Mar-a-Lago agreement\""
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/257178355.md"
description: "Japan's planned investment fund may heavily rely on its $1.3 trillion foreign exchange reserves. U.S. Treasury bonds are a key component of these reserves, with an estimated duration of 3-5 years. If Japan finances this long-term investment fund by selling short-term U.S. Treasury bonds, this capital movement could push up U.S. long-term bond yields, thereby weakening the dollar and strengthening the yen"
datetime: "2025-09-13T02:32:15.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/257178355.md)
  - [en](https://longbridge.com/en/news/257178355.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/257178355.md)
---

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# Is the Japanese yen strengthening? Citigroup: Japan's $550 billion investment fund may trigger a "mini Mar-a-Lago agreement"

Citigroup believes that the $550 billion investment fund involved in the US-Japan tariff agreement may give rise to some form of a bilateral "mini Mar-a-Lago agreement," promoting a weaker dollar and a stronger yen.

On September 12, Citigroup analyst Osamu Takashima released a research report stating that **the source of the $550 billion Japan plans to invest in the US may heavily rely on Japan's $1.3 trillion foreign exchange reserves.** The report noted:

> We do not expect a significant shift in multilateral monetary policy similar to the 'Mar-a-Lago agreement,' but a bilateral 'mini Mar-a-Lago agreement' is indeed possible.

The US Treasury bonds held by Japan are a key component of its foreign exchange reserves, with an estimated duration of 3-5 years. However, the investment fund established under the tariff agreement is expected to invest in US assets with a duration of 10-20 years.

**If Japan finances this long-term investment fund by selling short-term US Treasury bonds, such a fund 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.**

This high-level bilateral coordination to address potential market volatility is the basis for what Citigroup refers to as the "mini Mar-a-Lago agreement." Citigroup analysts emphasize:

> We believe that, from a monetary policy perspective, there will be a persistent tendency for a weaker dollar and a stronger 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 interest rate hike path, the yen has performed the worst among major currencies in the past three months.

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