US Breaks with Tradition in Secret Euro Sale for Yen
The US Treasury broke with tradition by selling euros to prop up the Japanese yen last week without prior notification to the European Central Bank. The trade was executed through the New York Federal Reserve, and the ECB only learned about it after the fact.
According to sources, the choice of euros was deliberate. Selling dollars might have signaled a retreat from Scott Bessent's strong-dollar policy, so the Treasury tapped its euro reserves instead.
The US Treasury spokesperson defended the decision, stating that decisions regarding the allocation of the Exchange Stabilization Fund are made by the US Treasury, taking into account assessments by the Treasury and the Federal Reserve of market liquidity, valuations, and other relevant considerations.
A senior Trump administration official pushed back on criticism, saying Washington respects the confidentiality of talks with foreign counterparts and contrasting that approach with the ECB's handling of the matter.