US Treasury Buys Euros, Sells Them for Yen in Unusual Intervention

The US Treasury Department has taken an unusual step to prop up the weak yen by buying euros and selling them for yen, in what analysts are calling a highly coordinated effort with Japan. This move is a departure from traditional intervention methods, where the US would buy yen and sell dollars.

According to market sources, the US Treasury Department carried out this unusual dynamic on Friday, confirming an earlier report by The Financial Times. Analysts at HSBC described this step as 'a highly unusual, maybe unprecedented, step'.

The move is likely aimed at helping Japan strengthen its currency without signaling a desire for a softer dollar, which could complicate efforts to rein in above-target inflation. As Lee Hardman, senior currency analyst at MUFG, noted: 'Given that at the moment the US has above target inflation, a weaker dollar right now isn't the best thing for them.'

The yen has recovered from 40-year lows near 164 and strengthened almost 4% last week, its biggest weekly jump in two years. The euro has fallen from as high as 187.4 yen on Thursday to dip briefly below 180 on Monday, an over 4% move.