The yen rises after Japan unilaterally intervenes for the first time in 24 years

The dollar fell sharply against the Japanese yen on Thursday, in the first intervention to support the currency since 1998, after the Bank of Japan bucked the trend of other central banks by not raising interest rates.

The dollar USDJPY,
fell sharply to trade at 142.20 yen from 144.08 yen on Wednesday, in action timed around the end of the business day in Japan.

Masato Kanda, vice finance minister for international affairs, was quoted by Bloomberg as saying the country was taking bold steps in the markets.

Expectations had been built that Japan could intervene, with the currency down 23% this year to a 24-year low.

“The big question is whether it will make a difference and change the long-term direction of the Japanese yen̵[ads1]7;s decline,” said Michael Hewson, market analyst at CMC Markets UK. “The 145/146 level appears to be a level the Bank of Japan appears to be defending at the moment given that last week’s interest rate check occurred around similar levels.”

Earlier in the day, the Bank of Japan kept interest rates unchanged, and Bank of Japan Governor Haruhiko Kuroda said it had no plans to keep pace with rate hikes by the US Federal Reserve and other central banks. He said the yen’s fall was “one-sided” and driven by speculation.

Japan’s intervention also comes ahead of a market holiday on Friday, where volumes are expected to be thin.

Viraj Patel, global macro strategist at Vanda Research, said a history of interventions shows they rarely work, but this time shorting the yen is a crowded trade and the European Central Bank and People’s Bank of China could also help by pushing back against dollar strength.

US stock futures ES00,
was higher after the intervention. The dollar’s strength, not only against the yen but also against other currencies, including the euro, has been seen as weighing on risky assets and has also been a blow to US multinationals.

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