Yen soars after Japan’s first FX intervention since 1998

The yen soared on Thursday after Japanese monetary authorities intervened in the foreign exchange market for the first time since 1998 to boost the ailing currency, though analysts said Japan may have Difficulties in maintaining strength for a long time.

* The dollar fell to 140.31 yen after the intervention and later fell 1.5% to 141.91 yen. Earlier it hit a new 24-year high at ¥145.9, making the spread between the day’s high and low for the pair the widest since June 2016.

* The euro, Australian dollar and sterling also tumbled against the Japanese currency before regaining some ground.

* The confirmation of the intervention by the Japanese authorities came hours after the Central Bank of Japan (BoJ) decided to keep interest rates low to support the country’s fragile economic recovery.

* Instead, central banks around the world, most notably the US Federal Reserve, are aggressively raising rates and the policy divergence has weighed on the yen. Analysts indicated that Japan cannot continue to support the currency on a sustained basis.

“Over the next three to six months, or even longer, as long as those divergences in monetary policy remain and those differences persist, you will continue to see a weaker yen,” said Brendan McKenna of Wells Fargo (NYSE: WFC ) Securities . .

* In a busy day for markets, the British pound parried the small gain made after the Bank of England raised rates by 50 basis points. The British currency was up 0.2% at $1.1295, close to a fresh 37-year low hit earlier at $1.1213.

* The euro was little changed at $0.9838, recovering from a fresh 20-year low hit earlier in global trading. The dollar index fell 0.3% to 111.17 units, from a 20-year high hit earlier in the day at 111.81.

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