ECB Left in Dark on Historic US-Japan Yen Intervention

The European Central Bank was left in the dark about the US side of last week's historic yen intervention until after the trade had been executed, according to a report by the Financial Times.

The FT reported that several people familiar with the matter said the ECB was not informed of the US move to sell euros to buy yen before the trade was made. This raises questions about how much advance alignment existed among major central banks before the intervention.

Last Friday, Japan and the US launched a rare joint yen-buying intervention, which involved buying yen in an effort to shore up the currency after its sustained slide. As part of this action, the US reportedly sold euros to help fund its yen purchases.

The timing gap described in the FT report is significant because it underscores the scale of concern among policymakers over the yen's weakness. The US decision to fund the trade with euros will be perceived as an unprecedented break from long-standing norms of cooperation among Western monetary authorities.