# Yen stems losses after report of BOJ rate check, hints on intervention
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-09-14
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Yen rises off 24-year low as Bank of Japan mulls
Meta Description: Stay informed on the latest yen movements after media reports of BOJ's rate check and policymakers' warnings about sharp falls in the currency.
URL: https://financedigest.com/yen-stems-losses-after-report-of-boj-rate-check-hints-on-interventionhtml

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By Kevin Buckland and Alun John

TOKYO/LONDON (Reuters) – The yen rose on Wednesday, moving off a 24-year trough, after media reports that the Bank of Japan conducted a rate check, an apparent preparation for currency intervention, while policymakers stepped up warnings about the yen’s sharp fall.

The dollar slid 1% to 143 yen, after the Nikkei website cited unidentified sources for its report on the rate check, in which central bank officials call up dealers and ask for the price of buying or selling yen.

The Japanese currency had softened [near to 144.97 per dollar](https://www.financedigest.com/russian-rouble-nears-4-week-high-versus-dollar.html "Russian rouble nears 4-week high versus dollar") early in the day, having tumbled the day before along with other majors as an unexpected rise in the U.S. [consumer price](https://www.financedigest.com/investors-warn-big-consumer-firms-over-price-hikes-as-competitors-gain.html "Investors warn big consumer firms over price hikes as competitors gain") index (CPI) sent the greenback soaring.

The dollar index jumped 1.5% on Tuesday, its [largest percentage gain since](https://www.financedigest.com/first-quarter-dash-for-cash-largest-since-early-2020-bofa.html "First quarter ‘dash for cash’ largest since early 2020 -BofA") March 2020.

Japanese [Finance Minister Shunichi Suzuki also said on Wednesday that the government was considering stepping in to combat sharp falls](https://www.financedigest.com/sentiment-in-uk-finance-falls-at-fastest-pace-since-2019-survey.html "Sentiment in UK finance falls at fastest pace since 2019, survey") in the currency, which has been battered by a surging greenback.

Suzuki told reporters that recent moves in the yen have been “rapid and one-sided”, adding that yen-buying currency intervention was among the government’s [options should such moves](https://www.financedigest.com/italys-brembo-to-move-to-amsterdam-to-increase-ma-options.html "Italy’s Brembo to move to Amsterdam to increase M&A options") continue.

The central bank probably considers recent moves in the [yen rate](https://www.financedigest.com/yen-sinks-as-rates-outlook-diverges-nz-dollar-tumbles.html "Yen sinks as rates outlook diverges; NZ dollar tumbles") as too sudden and too large,” said Masayuki Kichikawa, chief macro strategist, Sumitomo Mitsui DS Asset Management.

If the [market continues to sell the yen, there is more pressure for the MOF and BOJ to communicate to the market that the recent move](https://www.financedigest.com/zeal-to-move-through-settlements-anew-to-drive-the-glyphosate-market.html "Zeal To Move Through Settlements Anew To Drive The Glyphosate Market") has been too fast.

However, actually intervening the support the currency, would be a larger step.

Currently, the [dollar is becoming stronger](https://www.financedigest.com/oil-slumps-on-economic-data-stronger-u-s-dollar.html "Oil slumps on economic data, stronger U.S. dollar") and the yen weakening due to the big interest rate differentials between the United States and Japan, so it’s hard (for intervention) to be effective. That’s why I think it’s better to wait,” said Masafumi Yamamoto, chief currency strategist, Mizuho Securities.

If the [dollar rises](https://www.financedigest.com/dollar-slips-after-upbeat-china-data-euro-pound-rise.html "Dollar slips after upbeat China data; euro, pound rise") above 145 yen, the possibility of intervention will rise to about 60% from 10% to 20% before, rather than becoming 100%.

The currency [hit a 24-year low of 144.99 last week](https://www.financedigest.com/sterling-hits-2-1-2-week-high-eyes-on-boe.html "Sterling hits 2 1/2 week high, eyes on BoE").

The [yield on two-year Treasury](https://www.financedigest.com/wall-st-indexes-mixed-treasury-yields-tick-up-as-higher-rates-loom.html "Wall St indexes mixed, Treasury yields tick up as higher rates loom") notes, which typically reflects interest rate expectations, peaked at 3.804% on Wednesday, the highest since 2007. The 10-year yield last stood at 3.4313%.

Financial markets now have fully priced in an interest [rate hike](https://www.financedigest.com/ecbs-villeroy-rate-hike-signals-strong-confidence-in-european-banks.html "ECB’s Villeroy: rate hike signals strong confidence in European banks") of at least 75 bps at the conclusion of the FOMC’s policy meeting next week, with a 38% probability of a super-sized, full percentage-point increase.

A day earlier, the probability of a 100 bps hike was zero.

Other currencies were still hunkered down after yesterday’s battering, as a more aggressive pace of [rate hikes](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") in the U.S. and [higher yields would likely support the dollar](https://www.financedigest.com/dollar-jumps-as-powell-flags-higher-terminal-rate.html "Dollar jumps as Powell flags higher terminal rate").

The [euro was at $0.99935 up 0.25% but still reeling from Tuesdays 1.5% fall](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").

Sterling which lost 1.6% on Tuesday, was up 0.44% at $1.1545, after [lower fuel prices caused an unexpected fall in British inflation](https://www.financedigest.com/spains-inflation-to-be-lower-this-year-than-in-2022-minister.html "Spain’s inflation to be lower this year than in 2022 -minister") in August, official figures showed on Wednesday.

The risk-sensitive Aussie was flat at $0.67375, after a precipitous 2.26% slide overnight.

(Reporting by Kevin Buckland, Rae Wee and Alun John; Editing by Kim Coghill, Edmund Klamann and Toby Chopra)


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