BOJ intervenes to defend yen near 160, holds rates steady
The Japanese yen crosses a key psychological level after the country’s central bank reportedly conducted a major currency intervention.
The Japanese yen reached a psychological milestone, with the Bank of Japan (BoJ) reportedly intervening in the currency market. The central bank kept interest rates unchanged at 1.0% on Friday following the intervention. Yen values jumped nearly 3.5% as South Korea joined the intervention efforts. The Bank of Japan's statement revealed that officials broadly agreed to maintain rates at the current level, an outcome anticipated by markets.
Eight out of nine members of the bank's Policy Board voted to keep rates steady, with only one official, Hajime Takata, suggesting a rate increase of 0.25%. Japan's benchmark interest rate stands at its highest since 1995. The yen's surge against the US dollar came after significant volatility, attributed to central bank intervention.
The South Korean won rose by around 1% amid reports of a joint intervention between the BoJ and Korea's central bank. Analysts noted the "tightly aligned" mutual interests of Japan and South Korea that facilitated the joint move. The US had also engaged in rate checks during Thursday's trading session, sparking speculation of a coordinated three-way move.
The BoJ warned that future Consumer Price Index (CPI) inflation could accelerate above 2% by the second half of fiscal 2026, driven by rising durable goods prices and the waning effects of high crude oil prices.
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