Yen strengthens after Japanese government dumps dollars to prop up the currency in its first intervention since 1998
- Japanese yen climbed 1% against the dollar Thursday after authorities moved to prop up the currency.
- Tokyo is selling dollars and buying yen in a bid to stop recent sharp declines.
The Japanese yen strengthened against the US dollar on Thursday after Tokyo intervened to prop up the currency following months of declines.
The dollar fell as much as 2.6% to 140.31 yen and was down 0.6% to 143.21 yen at last check.
The yen's rally came after the Japanese government said it would buy yen and sell dollars in a bid to shore up the currency.
The yen has plummeted by almost a quarter against the greenback this year as the Bank of Japan pursues ultra-loose monetary policies while the US Federal Reserve raises interest rates aggressively.
"We have taken decisive action," said Masato Kanda, the vice-finance minister for international affairs, on Thursday.
He confirmed his comments meant that Tokyo had intervened in currency markets for the first time since 1998, when the yen's plunge to around 146 yen per dollar was seen as a threat to economic stability.
The move came after the Bank of Japan said on Thursday that it would stick to its loose monetary policies despite the yen's depreciation. The yen fell as low as 145 yen per dollar after that announcement.
"The big question is whether it will make a difference and change the long-term direction of the Japanese yen's decline," CMC Markets' chief analyst Michael Hewson said. "The 145/146 level does appear to be a level the Bank of Japan seems keen to defend at the moment given that last week's rate check happened around similar levels."
The euro and the British pound slid by just over 0.5% against the yen after Kanda's announcement.