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Japan Jumps Into Market to Buy Yen for First Time in 24 Years

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Japan Jumps Into Market to Buy Yen for First Time in 24 Years. What does that mean for the Yen and the dollar?

TOKYO—Japan intervened in the foreign-exchange market to buy yen for the first time in 24 years, shortly after the Bank of Japan accelerated a fall in the currency by confirming it would maintain ultralow interest rates.

The rare intervention was the latest example of global concern triggered by the strong dollar, which has gained ground on the back of the Federal Reserve’s interest-rate increases.

The unexpected market operation comes as Prime Minister Fumio Kishida is asked to intervene to lessen the negative effects of price increases harming the household and corporate sectors, since public support for his Cabinet has lately declined.

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Later on Thursday, during a news conference, Finance Minister Shunichi Suzuki stated that the government interfered in the foreign currency market that day in an effort to control erratic market movements, however he did not go into further detail on the precise time of the operation.

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According to Suzuki, the yen-buying program “has had a certain effect.” In order to “adopt suitable policies” to reduce volatility in the foreign currency market, he promised that the government will “maintain close communication” with the Bank of Japan.

Masato Kanda, Japan’s senior currency diplomat, told reporters prior to Suzuki’s statement that “We took a serious measure” in response to market speculative swings, and that “We will continue to observe foreign exchange moves with a great sense of urgency.”

Hours after the yen reached a fresh 24-year low against the dollar, Kanda, a senior official in the Finance Ministry, warned Japan may interfere in the market “anytime” to stop it from falling significantly worse.

Why Buy Yen for First Time in 24 Years?

The BOJ maintained its ultralow rate policy on Thursday, as was widely anticipated, to support the pandemic-hit economy. The BOJ also maintained its dovish posture despite the significant decrease in the value of the yen during a worldwide wave of tightening monetary policy to combat inflation.

Following Russia’s invasion of Ukraine in February, energy and food costs have been rising rapidly all around the world.

In an effort to battle rising inflation, the U.S. Federal Reserve increased its benchmark policy rate by 0.75 percentage points on Wednesday, reinforcing the belief among market investors that the difference in interest rates between the US and Japan will continue to widen.

Before Kanda made the remarks, the dollar reached its best level since 1998 during Thursday’s trade in Tokyo over the 145-yen mark.

In a news conference held following the event, BOJ Governor Haruhiko Kuroda added that the bank will not be raising interest rates for the next two to three years.

As Japanese goods become more affordable abroad, the value of foreign earnings increases in yen terms. However, a falling yen raises import prices. More than 90% of Japan’s energy requirements are met by imports.

According to official statistics released on Tuesday, Japan’s core consumer prices increased for the 12th consecutive month in August, jumping 2.8 percent from a year earlier to a nearly eight-year high. This is the latest indication of cost-push inflation without wage growth.

The last time the Japanese government intervened by selling yen rather than purchasing it was in October and November 2011.

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1 Comment

1 Comment

  1. Caroline

    September 23, 2022 at 8:18 am

    Japan should peg it currency on gold. Most countries should.

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More Russian Migrants Enter U.S. as Exceptions for Asylum Seekers Expand

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More Russian migrants are traveling through Mexico to seek asylum in the U.S., driven in part by an expanding U.S. government effort to allow more asylum seekers to cross the border legally.

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KYIV, Ukraine—Russian forces tightened their grip around the eastern city of Bakhmut on Friday as Ukrainian President Volodymyr Zelensky warned his country to prepare for a wider onslaught nearly one year since the start of the war.

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How a Radioactive Capsule Was Lost and Improbably Found in the Australian Outback

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Ukraine Braces for Major Russian Offensive

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Russia is preparing to launch a major new offensive against Ukraine in the coming weeks, a top Ukrainian security official said, adding to mounting concerns in Kyiv and the West that the Kremlin is preparing a renewed push to seize large areas of the country.

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Iran’s Deadly Street Protests Are Replaced by Quiet Acts of Rebellion

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Four months after a nationwide uprising erupted in Iran, a lethal crackdown and an ailing economy have quieted antigovernment street demonstrations.

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French Workers Mount New Strike Against Macron’s Pension Overhaul

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PARIS—Masses of French workers took to the streets for the second time in two weeks, piling more pressure on President Emmanuel Macron‘s plans to raise France’s retirement age and threatening further walkouts that could grind much of the country to a halt.

Striking teachers and railway, health and oil workers staged marches in dozens of cities as a part of a nationwide day of action called by unions to force the government to back down from its pension overhaul. Train, subway and bus services were severely curtailed, and dozens of flights were canceled. Many schools and nurseries remained closed.

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