Strategists say the US Treasury may have funded recent yen purchases with euros rather than dollars to avoid being seen to sell the dollar and undermine its strong-dollar policy. Two people familiar with the matter said the New York Fed last Friday asked at least two large US banks to check the yen–euro rate. David Forrest, a senior strategist based in Singapore, said Washington would want to avoid actions that look like weakening its currency for competitive advantage, which would contravene G2

Strategists say the US Treasury may have funded recent yen purchases with euros rather than dollars to avoid being seen to sell the dollar and undermine its strong-dollar policy. Two people familiar with the matter said the New York Fed last Friday asked at least two large US banks to check the yen–euro rate. David Forrest, a senior strategist based in Singapore, said Washington would want to avoid actions that look like weakening its currency for competitive advantage, which would contravene G20 FX norms. Jason Wang, currency strategist at BNZ in Wellington, said using euros is politically less damaging, though the effect may be temporary because funds will eventually need to be reallocated back into euros, which could still entail dollar selling in a less transparent form.