US Bypasses ECB in Surprise Move to Support Yen

The US Treasury Department has taken an unprecedented step in managing foreign exchange by selling euros through the Federal Reserve without consulting the European Central Bank (ECB) first.

This move was made on July 31st, as part of a joint intervention with Japan to stabilize the value of the yen. Instead of directly selling dollars, which could be seen as weakening the dollar's value, the US Treasury opted to sell euros.

This decision has been met with shock and disappointment from senior ECB officials, who view it as a break from long-standing conventions among Western currency authorities. One source described it as 'very shocking and disappointing'.

The US Treasury has defended its actions, stating that decisions on managing the Exchange Stabilization Fund (ESF) are made by them, taking into account assessments of market liquidity and other relevant factors. This move may have implications for the cooperative relationship between the US and ECB in maintaining financial market stability.