Japan intervenes in the foreign exchange market to stop the yen’s decline after the Bank of Japan kept rates very low

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  • The Bank of Japan maintains short- and long-term price targets
  • No modification to prudent policy guidelines
  • Japan Takes Decisive Action – Kanda Foreign Exchange Diplomat

TOKYO (Reuters) – Japan intervened in the currency market on Thursday to prop up the faltering yen for the first time since 1998, following the central bank’s decision to keep interest rates very low that sent the value of the Japanese yen down. Currency.

“We have taken decisive measures (in the exchange market),” Deputy Finance Minister for International Affairs Masato Kanda told reporters.

The dollar extended its slide against the yen and was last down more than 2% to 141.15 yen after the intervention was confirmed. It had earlier traded up more than 1% against the Japanese currency, which has fallen to 24-year lows.

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“The market was expecting some intervention at some point, given the increased verbal interventions we’ve been hearing over the past few weeks,” said Stuart Cole, chief macro economist at Equiti Capital in London.

“But currency intervention is seldom successful and I expect today’s move will only provide a temporary respite (for the yen).”

The move came hours after the Bank of Japan decided to keep interest rates very low to support the country’s fragile economic recovery, in the face of the global tide of monetary tightening by central banks struggling to rein in high inflation.

“There is absolutely no change in our stance of maintaining easy monetary policy for now. We will not raise interest rates for some time,” Bank of Japan Governor Haruhiko Kuroda said at a media briefing after the monetary policy decision.

The BOJ’s decision came after the US Federal Reserve raised its third consecutive interest rate increase by 75 basis points on Wednesday and signaled more increases ahead, underlining its determination not to back down in its fight against inflation and giving more support to the dollar. Read more

The yen has depreciated nearly 20% this year, as the Bank of Japan kept policy very loose while many of its global peers, such as the Federal Reserve, raised rates aggressively to cool high prices.

In a widely expected move, the Bank of Japan kept interest rates very low at a two-day meeting that ended on Thursday, and its pledge to keep rates at “current or low levels” was unchanged.

Yen-buying intervention was very rare. The last time Japan intervened to prop up its currency was in 1998, when the Asian financial crisis caused a sell-off of the yen and a rapid influx of capital from the region.

Before that, Tokyo intervened to counter the depreciation of the yen in 1991-92.

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(Reporting by Laika Kihara). Additional reporting by Tetsushi Kajimoto, Kantaro Komiya, Daniel Losink, Kaori Kaneko and Takaya Yamaguchi; Editing by Richard Boleyn, Sam Holmes and Kim Coogle

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