Japan Moves To Secure Dollars for US Projects

The Japanese government is considering a framework to help major banks secure U.S. dollar funding to finance investment projects under Tokyo’s $550 billion deal struck with the United States last year in exchange for tariff relief, a source close to the matter said.

Prime Minister Sanae Takaichi’s government is considering a request for support from Japan’s three biggest banks -- MUFG Bank, Sumitomo Mitsui Banking Corp and Mizuho Bankwhich are concerned about the cost of securing dollar funding.“It is impossible to secure dollars on our own to finance all the U.S. projects under the (trade) agreement,” a megabank source said.

One option under consideration is to provide dollars held in the government’s Foreign Exchange Fund Special Account, which manages assets used for foreign exchange market intervention.Under the trade deal sealed in July last year, the $550 billion commitment comprises investments, loans and loan guarantees from Japanese government-backed financial institutions.

Of the total, the two countries agreed on $36 billion worth of projects, including the construction of a gas-fired power plant, and a second round of projects worth up to $73 billion, including the construction of small modular nuclear reactors.