NY Fed: US Treasury bought ¥79.4B using euros, not dollars

The US Treasury bought ¥79.4 billion in the third quarter and paid for it with euros, not dollars. That is the detail in the New York Fed's quarterly report on foreign exchange operations, published Nov. 12. The purchase took place on July 31.

Details

According to the New York Fed report, the bank, acting as the Treasury's fiscal agent, bought ¥79.4 billion in the spot market against euros from the Exchange Stabilization Fund (ESF). The Treasury viewed the yen's moves as disorderly. The Federal Reserve itself did not intervene in FX markets (press release).

Japan's Ministry of Finance, in coordination, intervened for ¥15.4 trillion during the quarter. The dollar–yen rate had reached a multi-decade high near 164 in July. Between July 30 and Aug. 3 it fell to about 155, and over the whole quarter the dollar lost 3.2% against the yen. The report says market participants tied the yen's rise to purchases by the US Treasury and Japanese authorities, expectations of faster Bank of Japan rate hikes, and speculation about a shift in the GPIF pension fund's allocation.

The ESF's euro holdings fell from $13.1 billion to $12.6 billion over the quarter, while its yen assets rose from $5.8 billion to $6.5 billion. Both the Fed's SOMA portfolio and the ESF hold $19.1 billion in foreign-currency assets.

What it means for the market

The report confirms what the press described in August: the US helped Tokyo with euros rather than dollars. The report itself draws no link to bitcoin. We track the dollar and the yen in the daily brief because a sharp yen rally has in the past pressured risk assets through unwinding carry trades, but the report has no data on how the July intervention affected BTC, so we cite none.

The current bitcoin price is in the daily brief; price history is on the bitcoin page. This is not investment advice.