September 29, 2022

Japan intervenes to prop up the yen

2 min read

CNN Business

Japan tried to boost the value of its currency on Thursday by buying the yen and selling the US dollar for the first time in 24 years.

The yen had earlier fallen to its lowest level since 1998. The Federal Reserve aggressively raised interest rates. While the Bank of Japan has kept rates in negative to boost its weak economic recovery. The currency has depreciated by about 20 percent this year compared to the previous year. A rising US dollar.

“In the current foreign exchange market, we are seeing rapid and one-sided movements against a backdrop of speculative activity,” Japan’s Vice Finance Minister for International Affairs Masato Kanda told reporters on Thursday.

“The government is concerned about these extreme fluctuations and has just taken decisive action,” he added.

Thursday’s decision marks the first time since 1998 that the Japanese government has intervened in the foreign exchange market by buying the yen.

Earlier on Thursday, the Bank of Japan announced it would maintain its ultra-loose monetary policy, bolstering its external standing among G7 countries that are raising interest rates to control inflation. are

The central bank kept interest rates at minus 0.1%, hours after the Fed made history with its third straight quarter of a percentage point rate hike, taking benchmark U.S. rates between 3% and 3.25%. went.

This initially pushed the yen to 145 to the US dollar. However, those losses were reversed after the intervention news, and the yen was last trading around 141, up 2%.

Finance Minister Shunichi Suzuki told reporters at a press conference that the currency intervention had some effect and that Japan would not accept additional volatility in the market.

But he declined to comment on whether the intervention was US-backed, saying only that Japan was “in regular contact with the countries concerned.”

Japan was believed to be selling dollar-denominated assets, such as U.S. Treasuries, Japanese news agency Kyodo reported.

Japan last intervened to support its currency in 1998 during the Asian financial crisis. But it intervened as recently as — in November 2011 — to stop the yen from rising too quickly against the dollar, public broadcaster NHK reported.

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