NEW YORK—The euro surged by more than 1% against the dollar and the yen as the European Central Bank and four other central banks announced a coordinated effort with the Federal Reserve to offset shortages of dollars at European banks and businesses.
There has been widespread concern that some European banks are finding it difficult to get access to funds. On Wednesday, the ECB said two banks had tapped it for $575 million, the second time in six months the central bank had to dole out such funds.
The ECB's Governing Council "has decided, in coordination with the Federal Reserve, the Bank of England, the Bank of Japan and the Swiss National Bank, to conduct three U.S. dollar liquidity-providing operations with a maturity of approximately three months covering the end of the year," the ECB said in a statement.
The new dollar operations will be conducted in addition to the bank's current weekly dollar swaps, the ECB said.
"They are proactively trying to cover dollar liquidity needs," said Greg Anderson, senior foreign-exchange strategist at Citigroup.
This step could be enough to avert a funding crisis for now, he said. "If there is some other massive shock it may not prove to be enough but to proactively deal with year end issues, it is probably enough," Mr. Anderson said.
The euro was at $1.3874, after having touched $1.3916, compared with $1.3754 late Wednesday in New York. The euro rose to ¥106.55, after having surged to ¥106.93, up from ¥105.40. Against the Swiss franc, the euro was at 1.2055 franc, compared with 1.2046 franc.
"It's obvious the ECB is working hard to get ahead of the market's skittishness about funding availability and the markets are responding accordingly, as earlier losses in safe-haven assets are extending with risk assets surging," said Adrian Miller, senior vice president of fixed-income strategy at Miller Tabak Roberts Securities.
