Banking And Finance
Japan intervenes in the foreign exchange market to buy the yen for the first time since 1998, in an attempt to shore up the battered currency after the Bank of Japan (BOJ) stuck with ultra-low interest rates.
The move sent the dollar plunging over 2% to around 141.15 yen, after trading more than 1% higher earlier on the BOJ’s decision to stick to its super-loose policy stance, bucking a global tide of monetary tightening by central banks fighting to rein in soaring inflation.
Nonetheless, analysts doubted whether the move would halt the yen’s prolonged slide for long. The currency has depreciated nearly 20% this year, sinking to 24-year lows, largely as aggressive US interest rate hikes push the dollar higher.
Confirmation of intervention came hours after the BOJ’s decision to maintain low-interest rates to support the country’s fragile economic recovery.
Haruhiko Kuroda, BOJ’s Governor told reporters the central bank could hold off on hiking rates or changing its dovish policy guidance for years.
The Bank of Japan’s decision came after the US Federal Reserve delivered its third straight rate increase of 75 basis points on Wednesday and signaled more hikes ahead, underscoring its resolve not to let up in its battle against inflation and giving a further boost to the dollar.