U.S. sold euros to buy yen in rare intervention that blindsided the ECB, FT reports

A photograph of U.S. Treasury Secretary Scott Bessent’s notepad, captured by a Reuters photographer during a cabinet meeting at Camp David on July 31, 2026, showed a conspicuous “To Do” item: “Buy Japanese Yen (JPY) $5-10 bil.” The image, taken over Bessent’s shoulder while the meeting was open to the press, quickly circulated and fuelled speculation about American involvement in supporting Japan’s currency.

A notepad in front of U.S. Secretary of the Treasury Scott Bessent reads "To Do Buy Japanese Yen $5-10 bil" as he participates in a cabinet meeting at Camp David.
The note, photographed at 11:33 EDT, came after Reuters earlier reported the Treasury had put banks on alert for a… pic.twitter.com/EEsEATHXGK
— Acyn (@Acyn) August 1, 2026

That same day, the U.S. Treasury did intervene alongside Japanese authorities in a joint operation to prop up the yen, which had weakened to multi-decade lows against the dollar.

Trump quipped that Japan has been very good to the US “with the exception, of course, of Pearl Harbor,” while explaining the decision to help support the yen.

According to reporting by the Financial Times, the New York Federal Reserve executed the U.S. portion of the trade by selling euros (drawn from the Treasury’s Exchange Stabilization Fund) to buy yen – rather than the conventional approach of selling dollars. It marked the first coordinated U.S.-Japan effort to buy yen in nearly 30 years.

The decision to use euros, and the manner in which it was carried out, stands out as highly unusual and has drawn particular scrutiny for occurring without prior notice to European counterparts. The Financial Times reported that the European Central Bank was informed of the euro sales only after the trades had already been executed. ECB President Christine Lagarde and Bessent discussed the matter the following day (Saturday).

Senior ECB officials privately described the move as an unprecedented breach of longstanding conventions. Since the Second World War, Western central banks and finance ministries have emphasized mutual consultation and coordination on currency interventions to preserve trust and financial stability. Using euros instead of dollars – and doing so without advance warning – was called “very striking” and “sad” by one person familiar with European policymakers’ discussions. “This has never happened before,” the person told the FT, warning that decades of close cooperation could be under threat.

A U.S. Treasury spokesperson told the FT that decisions on allocating assets within the Exchange Stabilization Fund are made by the Treasury (taking into account liquidity, valuations and other factors) and are not coordinated with foreign authorities. Bessent later publicly described the euro sales as a simple reallocation of reserves and said he had reassured European partners, including central banks, on the point. An ECB spokesperson declined to comment publicly.

Analysts have suggested the choice of euros helped avoid any perception that the U.S. was seeking to weaken the dollar (consistent with a strong-dollar preference) and may also have reduced the risk that Japan would need to sell large volumes of US Treasuries to fund its own intervention. The episode has nonetheless highlighted frictions in traditional Western monetary coordination, with the bilateral US-Japan action proceeding largely outside broader G7 consultation.

Edited by g.g.

Caption: US Treasury Secretary Scott Bessent listens to US President Donald J. Trump (not pictured) on the first day of trading for Trump Accounts in the Oval Office of the White House in Washington, DC, USA, 06 July 2026. Trump Accounts grant eligible US children born between 2026 and 2028 USD 1000.00 to fund ‘starter’ IRAs. EPA/SHAWN THEW / POOL