20 October 2022 | Other

The yen has reached the key level of 150 against the dollar. Markets prepare for intervention

Shunichi Suzuki, Japan's finance minister, said Thursday that he would take "decisive steps" to combat excessive volatility in the currency market. Japan is thus renewing its threat to intervene, which was triggered by the yen falling to a 32-year low and the currency approaching the key barrier of 150.

As a measure to protect the 0% bond yield limit, the Bank of Japan put forward an emergency bond purchase offer. It is a demonstration of its willingness to maintain an ultra-low interest rate policy.

Such actions by the central bank indicate that Tokyo is facing the difficult task of trying to keep the yen down without raising interest rates, which could undermine Japan's fragile recovery.

While market participants' concerns about intervention have led to a slowdown in the yen's decline, analysts predict the currency will continue to decline as long as the Bank of Japan maintains a dovish policy amid a global wave of central bank rate hikes.

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