Japan's three largest banks—MUFG, Sumitomo Mitsui, and Mizuho—have collectively boosted their foreign currency liquidity buffers to $1.25 trillion. This move comes as they anticipate sudden demand for U.S. dollars amid ongoing tensions related to the Iran conflict. The increased liquidity is aimed at ensuring stability and readiness in the face of potential market disruptions.

The banks' actions reflect broader concerns in East Asia about geopolitical risks and their impact on financial markets. The bolstered reserves position Japan's banking sector to better manage foreign currency needs during uncertain times.

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