Japan intervened in the foreign exchange market to buy yen for the first time since 1998, in attempt to shore up the battered currency after the Bank of Japan stuck with ultra-low interest rates.
Analysts, however, doubted whether the move would halt the yen’s prolonged slide for long. The currency has depreciated nearly 20 per cent this year, sinking to 24-year lows, largely as aggressive US interest rate hikes push the dollar higher. The US dollar index, which measures the greenback against a basket of major currencies, struck a fresh 20-year high of 111.78.Russian President Vladimir Putin ordered Russia’s first wartime mobilisation since World War II and implicitly threatened the use of nuclear weapons.
BoJ governor Haruhiko Kuroda has ruled out a near-term withdrawal of stimulus due to lagging wages growth, dashing hopes of a policy shift. Any BoJ dovishness could unleash further yen selling, putting the ¥150 mark in reach. But further declines would be cause for concern for the BoJ.Yield-seeking Japanese retail investors have been absent from currency markets during the pandemic as central banks pushed rates towards zero, diminishing the appeal of yen-funded carry trades. A carry trade involves borrowing low to invest in an asset that earns a higher return.