US Bypasses Europe to Defend Japanese Currency with Unconventional Move

The United States joined Japan's currency defense last week in an unusual move that bypassed Europe. According to the Financial Times, on July 31, the Federal Reserve Bank of New York bought yen on behalf of the U.S. Treasury without selling dollars to fund the purchase. Instead, it sold euros and routed the trades through Goldman Sachs and Morgan Stanley.

The Japan Ministry of Finance confirmed the joint operation as an action against disorderly moves in the yen on August 3. The move was described as a coordinated effort between the US and Japan to stabilize the Japanese currency.