By Leika Kihara
TOKYO (Reuters) -Japan intervened in the currency market on Thursday for the first time since 1998 to shore up the battered yen, in the wake of the central bank’s decision to maintain ultra-low interest rates that have been driving down the currency.
“We have taken decisive action (in the exchange market),” vice finance minister for international affairs Masato Kanda told reporters, responding in the affirmative when asked if that meant intervention.
The dollar extended its fall against the yen and was last down over 2% at 141.15 yen after confirmation of the intervention. It had earlier traded more than 1% higher against the Japanese currency which plumbed fresh 24-year lows.[FRX/]
The move came hours after the BOJ’s decision to maintain super-low interest rates to support economic growth, bucking a global tide of monetary tightening by central banks fighting to rein in soaring inflation.
“There’s absolutely no change to our stance of maintaining easy monetary policy for the time being. We won’t be raising interest rates for some time,” BOJ Governor Haruhiko Kuroda told a briefing after the policy decision.
The BOJ’s decision came after the U.S. Federal Reserve delivered its third straight rate increase of 75 basis points on Wednesday and signalled more hikes, underscoring its resolve not to let up in its battle against inflation.
The yen has depreciated nearly 20% this year, as the BOJ has kept policy super-loose while many of its global peers, such as the U.S. Federal Reserve, have aggressively raised interest rates to combat surging inflation.
In a widely expected move, the BOJ maintained ultra-low interest rates at a two-day meeting that ended on Thursday and left unchanged a pledge to keep rates at “present or lower levels.”
Yen-buying intervention has been very rare. The last time Japan intervened to support its currency was in 1998, when the Asian financial crisis triggered a yen sell-off and a rapid capital outflow from the region. Before that, Tokyo intervened to counter yen falls in 1991-1992.
(Reporting by Leika Kihara; Additional reporting by Tetsushi Kajimoto, Kantaro Komiya, Daniel Leussink, Kaori Kaneko and Takaya Yamaguchi; Editing by Richard Pullin, Sam Holmes and Kim Coghill)