TOKYO, Oct 22 (Reuters) – (This Oct.22 story has been corrected to show dollars, not yen, drop in paragraph 3)
Japan intervened in the foreign exchange market on Friday to buy yen for the second time in a month after the currency fell to a 32-year low near 152 to the dollar, a government official and another person familiar with the matter told Reuters.
Japan is trying to cover the battered currency as the central bank sticks to ultra-low interest rates, bucking a global trend of tightening monetary policy and widening the gap between US interest rates and of Japan.
After the dollar rose to 151.94 yen , the highest level since 1990, the intervention drove the greenback down more than 7 yen to a low of 144.50 yen. The US currency was last down 1.8% at 147.34 yen.
The Ministry of Finance (MOF) intervened in several steps from about 9:35 pm (1235 GMT), one source said.
“We are maintaining our position to be ready to take appropriate action against excessive forex volatility,” Prime Minister Fumio Kishida told reporters on Saturday after a meeting with Australia’s Anthony Albanese, reiterating that such volatility could not be suffer
Kishida declined to comment further, saying, “I will not make any detailed commentary on forex” when asked about Friday’s intervention.
Japan’s top currency diplomat, Masato Kanda, also declined to say whether the MOF had intervened.
“We will not comment now on whether we intervened or not,” Kanda, the deputy finance minister for international affairs, told Reuters, adding that this is a position the MOF has been sticking to for several weeks.
He added that the ministry would not confirm whether intervention had taken place for some time yet, indicating a “stealth intervention” that could engage in a war of nerves against investors selling the yen.
The MOF also bought the yen on September 22, as investors focused on the growing divergence between the BOJ’s ultra-loose monetary policy and the US Federal Reserve’s aggressive rate hikes.
Finance Minister Shunichi Suzuki and Kanda have repeatedly indicated that the government is ready to intervene, warning against excessive volatility. Suzuki said before the intervention on Friday that the authorities were ready to act “strictly” against speculators.
Many market participants doubt whether Tokyo can reverse the yen’s downward trend with a single intervention, even with Japan’s $1.33 trillion in foreign reserves.
The Group of Seven industrial powers agreed this month to closely monitor recent volatility but gave no indication they were prepared for joint intervention.
Japan bought ¥3.6 trillion ($24 billion) in September action, Tokyo money market brokerage firms estimated.
($1 = 147.6400 yen)
Reporting by Shinji Kitamura, Yoshifumi Takemoto, Tetsushi Kajimoto, Kiyoshi Takenaka and Kentaro Sugiyama; Written by Sakura Murakami and Leika Kihara; Editing by William Mallard
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