US Euro Intervention Sparks ECB Coordination Questions

The US Treasury used its euro reserves to support the Japanese yen in a coordinated intervention with Tokyo, but only informed the European Central Bank (ECB) after the transaction was completed.

According to people familiar with the matter cited by the Financial Times, Washington sold euros from its foreign-exchange reserves to buy Japanese yen. The US Treasury has authority to buy or sell its euro holdings as part of its official foreign-exchange assets.

The use of euros instead of dollars enabled the US to support the yen without directly increasing the supply of dollars in the market, which could have had unintended consequences on global currency dynamics.