Yen jumps after authorities intervene for first time since 1998

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TOKYO/LONDON, Sept 22 (Reuters) – The Japanese yen rose sharply against the dollar on Thursday after authorities intervened in the foreign exchange market for the first time since 1998 to prop up the struggling currency.

The dollar fell more than 1% to 142.3 yen, after trading more than 1% higher against the Japanese currency. It was last down 0.42% at 143.4.

The Japanese government has intervened in the foreign exchange market to sell dollars for yen to stem the Japanese currency’s recent sharp falls, top monetary diplomat Masato Kanda said Thursday. Read more

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“Given that the BOJ just backed very accommodative monetary policy and this came right after the Fed backed a hawkish outlook, I think the fundamentals will push the dollar/yen higher,” said Jane Foley, head of Rabobank’s monetary strategy.

“But what Japan is doing is sending a signal that it’s not a free ride to push the dollar/yen higher.”

Against other major currencies, the dollar hit multi-year highs after the Federal Reserve surprised markets with hawkish interest rate projections, while the Swiss franc fell after the central bank raised rates by 75 basis points.

The dollar and euro both climbed more than 1% against the Swiss franc, with the dollar remaining at 0.9764 and the euro at 0.9628.

The Swiss National Bank raised its key interest rate to 0.5% from the minus 0.25% level it set in June – only the second increase in 15 years.

“I think the overreaction in EUR/CHF was due to the idea that the SNB might make 100 basis points, after the (Swedish) Riksbank earlier this week. I think the market reaction, the rally EUR/CHF, is a bit exaggerated.” said Chris Turner, global head of markets at ING.

The dollar was also stronger against other major currencies and the dollar index – which measures the US unit against a basket of six peers – earlier hit 111.81 for the first time since mid-2002.

The euro weakened to a new 20-year low at $0.9807, and the pound fell to a new 37-year low at $1.1213.

The Bank of England is meeting later today, and the market currently sees around an 85% chance of a 75bp rate hike by the BOE, and 15% of a half-basis rate hike. point. 0#BOWATCH

On Wednesday, the Fed released new projections showing rates peaking at 4.6% next year with no cut until 2024. It raised its target interest rate range by an additional 75 basis points (bps) from the overnight at 3%-3.25%, as was widely expected. Read more

The dollar was already supported by demand for safe-haven assets after Russian President Vladimir Putin announced he would call up reservists to fight in Ukraine and said Moscow would respond with the might of all its vast arsenal if the West continued. what he called his “nuclear program”. blackmail” on the conflict there. Read more

Commodity currencies were also hit hard due to deteriorating risk sentiment.

The Aussie fell as low as $0.6574, its lowest since mid-2020. Currency liquidity can be thin as Australia has a bank holiday.

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Reporting by Kevin Buckland in Tokyo and Alun John in London; Editing by Edwina Gibbs, Ana Nicolaci da Costa, Kim Coghill and Emelia Sithole-Matarise

Our standards: The Thomson Reuters Trust Principles.

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