The dollar extended its decline against the yen and lost more than 2% to 141.15 yen after the intervention was confirmed. Earlier, the dollar had risen more than 1% against the Japanese currency, which had hit its lowest level in 24 years.
“The market expected some intervention at some point, given the increasing verbal interventions that we have heard in recent weeks,” said Stuart Cole, chief macroeconomist at Equiti Capital in London.
“But currency interventions are rarely successful and I think today’s move will only provide a temporary respite (for the yen).”
LThe move came hours after the Bank of Japan’s decision to keep interest rates extraordinarily low to support economic growth, against a global wave of monetary tightening from central banks struggling to rein in rising inflation.
“There is no change in our stance of keeping monetary policy loose for the time being. We will not raise interest rates for some time,” Bank of Japan Governor Haruhiko Kuroda said at a briefing after the decision.
The Bank of Japan’s decision came after the US Federal Reserve on Wednesday made its third consecutive interest rate hike of 75 basis points and signaled further hikes, underscoring its decision not to budge in its fight against inflation.
The yen has depreciated almost 20% this year, as the Bank of Japan has maintained an extraordinarily easy monetary policy, while many of its global counterparts, like the Federal Reserve, they have aggressively raised rates to cool rising prices.
The Bank of Japan kept interest rates ultra-low as expected in a two-day meeting that ended Thursday, leaving unchanged its promise to keep them at “current levels or below.”
Yen buying intervention has been very infrequent. The last time Japan stepped in to support its currency was in 1998, when the Asian financial crisis triggered a yen selloff and a rapid capital outflow from the region.
Earlier, Tokyo intervened to counter the yen’s slump in 1991-1992.