Japan still has enough firepower to step back into currency markets if the yen weakens further, Goldman Sachs said, arguing that the country’s reserve position remains substantial even after July’s intervention. The bank estimates Tokyo has close to $1 trillion in reserves, including about $200 billion in cash or cash equivalents, and says Japan would not need most of that pool to match July’s operation. Goldman also highlighted the Federal Reserve’s FIMA repo facility (program allowing central banks to borrow dollars against Treasuries), which could let Japan tap dollar liquidity without selling U.S. government bonds in the open market. The yen has already surrendered much of its post-intervention rebound, slipping back toward 160 per dollar this week after falling toward 164 in July, its weakest level in four decades. Goldman Sachs strategist Karen Fishman said failure by the Bank of Japan to deliver a quarter-point rate increase in September, which markets price at a 65% chance, would likely renew pressure on the currency. Goldman’s head of foreign exchange options trading, Praneet Shah, said softer U.S. inflation or jobs data could reduce that pressure and revive expectations of another intervention. Goldman argues the deeper issue remains the wide interest-rate gap between Japan and the United States. Ten-year Treasury yields were near 4.69% this week versus 2.839% for 10-year Japanese government bonds, encouraging capital to favor U.S. assets. Tokyo deployed roughly $85 billion over the first two days of July’s operation, which Goldman described as Japan’s largest two-day intervention outside the period after the 2011 Fukushima disaster. Options markets still show elevated premiums on short-dated yen calls, indicating investors remain cautious about positioning against a rebound. In Goldman’s view, Japan’s next move depends less on reserve size than on the Fed and the Bank of Japan.