TOKYO (AFP) – Japan’s finance ministry said yesterday it intervened in the currency market to bolster the yen, which has plummeted against the dollar in recent months on the widening policy gap between the United States (US) and Japanese central banks.
It was the first government intervention to prop up the currency since 1998 and came after the dollar surged to nearly JPY146 earlier in the day.
The yen has been weakening against the dollar for months, but sank further yesterday after the US Federal Reserve again hiked rates to tame inflation, while the Bank of Japan (BoJ) left its ultra-loose monetary policy in place.
“There have been some rapid, one-sided developments on the back of speculative movement in the foreign exchange market,” Japan’s Vice Finance Minister for International Affairs Masato Kanda told reporters yesterday evening.
“The government is worried about these excessive fluctuations and has just taken resolute action,” he added, confirming this referred to intervention.
His remarks saw the yen pare most of its losses, with the dollar retreating as low as JPY140.70.
Inflation in Japan is rising, with the consumer price index in August at 2.8 per cent, its highest level since 2014, but the central bank views the increases as temporary. In its policy statement earlier yesterday, it said it would leave its current policy in place, “aiming to achieve the price stability target of two per cent, as long as it is necessary”.
“It will continue expanding the monetary base until the year-on-year rate of increase in the observed CPI exceeds two per cent and stays above the target in a stable manner.”
