Full Breakdown
United States Sells Euros to Buy Yen, Catching the European Central Bank Off-Guard
8/9/2026, 2:05:08 AM
Core Intervention: Euro Sale for Yen on July 31
On July 31, the U.S. Treasury, acting through the Federal Reserve Bank of New York, sold euros and used the proceeds to purchase Japanese yen in a coordinated operation with Japan’s finance ministry. The transaction was executed before the European Central Bank (ECB) was notified; ECB President Christine Lagarde and Treasury Secretary Scott Bessent discussed the trade only on August 1. The move was intended to support the yen after it fell to a four-decade low.
Background & Context
The yen had slid to ¥163.73 per dollar on July 30, its weakest level in close to forty years. Japan intervened by selling U.S. dollars for yen, and the United States joined the effort, opting to sell euros rather than dollars—a departure from the usual practice. The last joint U.S.–Japan yen-buying operation occurred in 1998.
Timeline
- July 30 – Yen reaches ¥163.73 per dollar.
- July 31 – U.S. Treasury sells euros; Japan buys yen.
- August 1 – Lagarde and Bessent speak about the transaction.
- August 3-4 – U.S. and Japanese officials warn they will act again if needed; Bessent calls the trade “a reallocation of our reserves.”
Data & Statistics
- Yen moved from ¥163.73 (July 30) to a high of ¥155.20 on August 3, then eased to about ¥157.5 by August 5.
- The euro fell more than 4 %, dropping from ¥187.4 on July 30 to briefly below ¥180 on August 3, later stabilising between ¥181–183.
- Estimates of the combined U.S.–Japan effort range around $87 billion (€75.4 billion).
- Japan may have sold $58.97 billion (€51.1 billion) on July 30 before the joint operation.
- The United States holds roughly €26 billion in readily deployable foreign currency.
Official Statements & Responses
- Satsuki Katayama said Tokyo stands ready to act again if needed.
- James Turner, head of BlackRock’s global bond business for Europe, the Middle East and Africa, warned the surprise move signals “a little less cooperative” relationship between Washington and Europe, potentially making long-term government bonds harder to price.
Why It Matters
The euro-sale strategy let the United States support Japan without signalling a desire for a weaker dollar, aligning with the administration’s “strong-dollar” policy. Analysts note that an uncoordinated currency move can raise “geopolitical risk” and “term-premium risk,” making long-term U.S. Treasury bonds less attractive. The episode highlights shifting dynamics in Western monetary cooperation and may affect the euro’s role as a global reserve currency.
Conflicting Reports & Gaps
- The total value of the intervention is reported variously as $87 billion (€75.4 billion), $58.97 billion (€51.1 billion) (Japan’s pre-joint sales), and “around $87 billion” in other estimates, indicating uncertainty about the precise scale.
- While some sources cite the yen’s strongest level at ¥155.20, others note it eased to ?¥157.5 by August 5, reflecting rapid fluctuations that complicate assessment of the intervention’s immediate impact.
Verbatim Quotes
- “Buy Japanese Yen (JPY) $5-10 bil” — Scott Bessent, US treasury secretary
- “I'm a smart voice and should be listened to,” — Donald Trump, US president
