Reserve yen covering reduced squad's grant (7)
I believe the answer is:
subsidy
'grant' is the definition.
(subsidy is a kind of grant)
'reserve yen covering reduced squad's' is the wordplay.
'reserve' becomes 'sub' (I've seen this in other clues**).
'yen' becomes 'y'.
'covering' is an insertion indicator.
'reduced' means to remove the last letter.
'squad' becomes 'side'.
'sub'+'y'='suby'
'side' with its last letter taken away is 'sid'.
'suby' enclosing 'sid' is 'SUBSIDY'.
(Other definitions for subsidy that I've seen before include "Money granted to support an undertaking" , "Grant to help defray costs" , "Grant paid to help with running costs" , "Grant given to help with running costs" , "Grant to keep prices low" .)