US Treasury Unveils Rare Euro-Selling Maneuver to Bolster Yen

The US Treasury Department has taken an unusual step in currency markets by selling euros and buying yen. This move is part of a joint intervention with Japan to prop up the weak yen, which was confirmed on Monday.

According to the Financial Times, instead of buying yen and selling dollars as usual, the US Treasury bought yen for euros, indicating that the US authorities want to help Japan strengthen the yen without encouraging a weaker dollar. Analysts at HSBC described this move as 'a highly unusual, maybe unprecedented, step'.

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 fell from 187.4 yen on Thursday to dip briefly below 180 on Monday, an over 4% move.

Central bank data indicated that Japan may have spent as much as $36.58 billion buying yen during Friday's joint intervention. MUFG's Lee Hardman said it was unlikely to have much effect on the euro given the relatively limited amount of the currency held by the United States.