# Yen rallies after Japan intervenes with first support since 1998
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-09-22
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Japanese Yen Soars as Authorities Intervene in FX Market
Meta Description: The Japanese yen soared after Japan intervened in the forex market. Will their efforts to boost the yen be successful in the long run? Find out more in this
URL: https://financedigest.com/yen-rallies-after-japan-intervenes-with-first-support-since-1998html

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By Gertrude Chavez-Dreyfuss and Alun John

NEW YORK/LONDON (Reuters) – 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](https://www.financedigest.com/resilient-u-s-dollar-soars-to-24-year-high-vs-yen-37-year-peak-vs-sterling.html "Resilient U.S. dollar soars to 24-year high vs yen, 37-year peak vs sterling"). The spread between the day’s high and low for the pair was the widest [since June](https://www.financedigest.com/uk-mortgage-approvals-hit-lowest-since-june-2020.html "UK mortgage approvals hit lowest since June 2020") 2016.

North American traders cautiously [pushed the dollar higher](https://www.financedigest.com/powells-warning-on-higher-u-s-rates-pushes-dollar-to-3-mth-high.html "Powell’s warning on higher U.S. rates pushes dollar to 3-mth high") 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](https://www.financedigest.com/new-york-catches-up-with-london-to-head-citys-global-centres-survey.html "New York catches up with London to head City’s global centres survey").

There is a risk that Japan becomes a permanent presence in the [market for intervention to be successful](https://www.financedigest.com/the-secret-to-stock-market-success.html "The Secret to Stock Market Success"). Not that Japan has to step in everyday, but the [market has to be afraid of intervention,”](https://www.financedigest.com/discrete-digitization-to-drive-the-aortic-intervention-market.html "Discrete digitization to drive the Aortic Intervention Market") he added.

The euro, pound, [Swiss franc](https://www.financedigest.com/swiss-franc-grapples-with-safe-haven-identity-crisis-after-credit-suisse.html "Swiss franc grapples with safe-haven identity crisis after Credit Suisse"), the Australian and New Zealand dollars, among others, also plunged against the yen.

We have taken decisive action,” Japan’s Vice [Finance Minister](https://www.financedigest.com/scottish-finance-minister-kate-forbes-to-run-for-countrys-leadership.html "Scottish finance minister Kate Forbes to run for country’s leadership") 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](https://www.financedigest.com/5-ways-the-fs-industry-can-support-the-recovery.html "5 ways the FS industry can support the recovery").

[BOJ Governor Haruhiko Kuroda told reporters the central bank could hold off on hiking rates or changing its dovish policy](https://www.financedigest.com/yen-trims-gains-as-possible-next-boj-governor-says-current-policy-appropriate.html "Yen trims gains as possible next BOJ governor says current policy appropriate") 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](https://www.financedigest.com/yen-sinks-as-rates-outlook-diverges-nz-dollar-tumbles.html "Yen sinks as rates outlook diverges; NZ dollar tumbles").

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](https://www.financedigest.com/swedish-match-continues-to-see-strong-smoke-free-sales-growth.html "Swedish Match continues to see strong smoke-free sales growth") 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](https://www.financedigest.com/russias-largest-lender-sberbank-on-track-to-profitability-says-ceo.html "Russia’s largest lender Sberbank on track to profitability, says CEO") yearly percentage gain in 43 years.

[CENTRAL BANK](https://www.financedigest.com/no-santa-rally-for-markets-as-central-banks-dampen-peak-rate-hopes.html "No Santa rally for markets as central banks dampen peak rate hopes") 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](https://www.financedigest.com/bank-of-england-officials-split-over-future-path-for-rates.html "Bank of England officials split over future path for rates") by 50 basis points.

The [hike was in line with expectations](https://www.financedigest.com/ecbs-makhlouf-expects-50-bps-rate-hike-in-december.html "ECB’s Makhlouf expects 50 bps rate hike in December"), 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 Asia](https://www.financedigest.com/asia-shares-weigh-china-risks-yen-hits-6-month-high.html "Asia shares weigh China risks, yen hits 6-month high") trading.

The [euro was little](https://www.financedigest.com/big-fall-in-euro-zone-inflation-offers-little-help-for-ecb.html "Big fall in euro zone inflation offers little help for ECB") 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](https://www.financedigest.com/asian-shares-rise-dollar-dips-ahead-of-fed-policy-decision.html "Asian shares rise, dollar dips ahead of Fed policy decision") meeting on Wednesday.

The [Fed issued new projections showing rates](https://www.financedigest.com/oil-dips-as-potential-fed-rate-hike-overshadows-falling-stocks.html "Oil dips as potential Fed rate hike overshadows falling stocks") peaking at 4.6% next year with no cuts until 2024. It [raised its target interest rate](https://www.financedigest.com/boe-raises-rates-again-as-investors-look-towards-end-of-hikes.html "BoE raises rates again as investors look towards end of hikes") range by another 75 basis points (bps) overnight to 3%-3.25%, as widely expected.

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](https://www.financedigest.com/fintechs-support-of-ukraines-digital-businesses-can-be-used-as-blueprint-across-the-world.html "Fintech’s support of Ukraine’s digital businesses can be used as blueprint across the world").

Separately, the [Swiss franc tumbled after Switzerland’s central bank](https://www.financedigest.com/swiss-regulator-monitoring-banks-and-insurers-after-svb-collapse.html "Swiss regulator monitoring banks and insurers after SVB collapse") raised rates by 75 bps, when some had talked up the possibility of a full percentage point move.

The [dollar and euro](https://www.financedigest.com/dollar-slips-yuan-gains-on-china-pmi-hot-inflation-lifts-euro.html "Dollar slips, yuan gains on China PMI; hot inflation lifts 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](https://www.financedigest.com/sp-warns-of-possible-economic-blow-hit-to-japan-inc-from-boj-rate-hike.html "S&P warns of possible economic blow, hit to Japan Inc from BOJ rate hike") by an expected 50 bps, and signalled 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

Previous Change

Session

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/Dollar

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](https://www.financedigest.com/new-york-holds-top-spot-london-second-in-z-yen-financial-centre-survey.html "New York holds top spot, London second in Z/Yen financial centre survey"), Kevin Buckland in Tokyo; Editing by Kirsten Donovan)


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