US Unleashes Rare Euro-Selling Intervention to Bolster Yen

The US Treasury Department has taken an unusual step in currency markets by buying yen for euros, rather than the traditional method of buying yen and selling dollars. This move, confirmed on Monday, was carried out jointly with Japan's Ministry of Finance to prop up the weak yen.

According to HSBC analysts, this is a 'highly unusual, maybe unprecedented, step'. The US Treasury's decision likely reflects its desire to help Japan strengthen the yen without encouraging a weaker dollar, which could complicate efforts to rein in above-target inflation.

Lee Hardman, senior currency analyst at MUFG, said that a weak dollar would not be beneficial for the US at this time, as it could lead to higher inflation and potentially cause the Federal Reserve to raise interest rates.

The yen has strengthened significantly since last week's intervention, recovering from 40-year lows near 164 to around 157 per dollar. The euro has fallen by over 4% against the yen, dropping briefly below 180 on Monday.