Yen rallies after Japan intervenes with first support since 1998
NEW YORK/LONDON — The Japanese yen soared across the board on Thursday after
monetary authorities intervened in the foreign exchange market to boost the battered currency for the first
time since 1998, although analysts said Japan may struggle to keep the yen strong.
The dollar was last down 1.2% at 142.33 yen. It hit a low of 140.31 after the intervention,
having earlier reached a fresh 24-year peak of 145.9 yen. The spread between the day’s high and low for the
pair was the widest since June 2016.
North American traders cautiously pushed the dollar higher against the yen after Japan stepped in, but
for now, few are challenging Japan’s action.
“The market is nervous,” said Steven Englander, head of global G10 FX research and North America
macro strategy at Standard Chartered in New York.
“There is a risk that Japan becomes a permanent presence in the market for intervention to be
successful. Not that Japan has to step in everyday, but the market has to be afraid of intervention,” he
The euro, pound, Swiss franc, the Australian and New Zealand dollars, among others, also plunged against
“We have taken decisive action,” Japan’s Vice Finance Minister for international affairs Masato Kanda
told reporters, responding in the affirmative when asked if that meant intervention.
Confirmation of the intervention came just hours after the BOJ decided to maintain low interest rates to
support the country’s fragile economic recovery.
BOJ Governor Haruhiko Kuroda told reporters the central bank could hold off on hiking rates or changing
its dovish policy guidance for years.
In contrast, central banks around the world, most notably the Federal Reserve, are raising rates
aggressively and the policy divergence has weighed on the yen.
However, analysts said Japan can’t keep propping up the currency on a sustained basis.
“Over the next three to six months or possibly even longer, as long as those diverging paths of monetary
policy are still in place and those differences persist, you’ll continue to see a weaker yen,” said Brendan
McKenna, international economist and FX Strategist at Wells Fargo Securities.
Even after Thursday’s moves, the dollar is still up 23.6% against the yen so far this year, on track for
its largest yearly percentage gain in 43 years.
CENTRAL BANK BONANZA
In a busy day for markets, the pound pared the small advance it had made in London trading after the
Bank of England raised interest rates by 50 basis points.
The hike was in line with expectations, although markets had been pricing in a small chance of a larger
75 bp move.
Sterling was last down 0.2% at $1.1251, not too far from a fresh 37-year low of $1.1213, hit in
The euro was little changed at $0.9832, recovering from a new 20-year trough of $0.9807 hit
earlier in the global session.
The dollar index, which measures the greenback’s value against a basket of six major currencies,
slipped 0.1% to 111.32, sliding from a 20-year high of 111.81 hit early in the day following the conclusion
of the Fed’s policy meeting on Wednesday.
The Fed issued new projections showing rates peaking at 4.6% next year with no cuts until 2024. It
raised its target interest rate range by another 75 basis points (bps) overnight to 3%-3.25%, as widely
The dollar was already supported by demand for safe-haven assets after Russian President Vladimir Putin
announced on Wednesday he would call up reservists to fight in Ukraine.
Separately, the Swiss franc tumbled after Switzerland’s central bank raised rates by 75 bps, when some
had talked up the possibility of a full percentage point move.
The dollar and euro both climbed roughly 1.2% against the franc, with the greenback last at 0.9783
francs and the euro at 0.9619 francs.
The Norwegian crown eased against the euro and dollar after the country’s central bank hiked interest
rates by an expected 50 bps, and signaled a more gradual approach to tightening ahead.
The euro was last up 0.5% at 10.2203 crowns, while dollar rose 0.3% to 10.3955.
Currency bid prices at 3:04PM (1904 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Dollar index 111.2800 111.4700 -0.15% 16.325% +111.8100 +110.4600
Euro/Dollar $0.9835 $0.9838 -0.01% -13.47% +$0.9908 +$0.9807
Dollar/Yen 142.4400 144.1050 -1.16% +23.72% +145.8900 +140.3100
Euro/Yen 140.09 141.73 -1.16% +7.50% +143.7000 +138.7200
Dollar/Swiss 0.9787 0.9663 +1.30% +7.32% +0.9849 +0.9622
Sterling/Dollar $1.1255 $1.1270 -0.11% -16.76% +$1.1363 +$1.1213
Dollar/Canadian 1.3487 1.3466 +0.16% +6.68% +1.3544 +1.3410
Aussie/Dollar $0.6643 $0.6633 +0.18% -8.58% +$0.6670 +$0.6574
Euro/Swiss 0.9624 0.9507 +1.23% -7.18% +0.9715 +0.9468
Euro/Sterling 0.8736 0.8729 +0.08% +4.00% +0.8759 +0.8692
NZ $0.5843 $0.5853 -0.16% -14.62% +$0.5887 +$0.5806
Dollar/Norway 10.3970 10.3560 +0.34% +17.96% +10.4330 +10.2930
Euro/Norway 10.2318 10.1766 +0.54% +2.19% +10.2519 +10.1386
Dollar/Sweden 11.0681 11.0627 -0.14% +22.74% +11.1375 +10.9718
Euro/Sweden 10.8611 10.8759 -0.14% +6.13% +10.9290 +10.8530
(Reporting by Gertrude Chavez-Dreyfuss in New York and Alun John in London; Additional reporting by Bansari
Mayur Kamdar in Bengalaru and Harry Robertson in London, Kevin Buckland in Tokyo; Editing by Kirsten