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.

Japan’s central bank held interest rates steady at 1.0% on Friday after a reported major intervention in the yen.

Yen rises up to 3.5% as Korea joins intervention

In its latest statement, the Bank of Japan (BoJ) revealed broad consensus among officials for holding rates at current levels — an outcome that markets had anticipated in advance.

“The Bank will encourage the uncollateralized overnight call rate to remain at around 1.0 percent,” it confirmed.

Eight out of nine members of the bank’s Policy Board voted for the outcome, with only Hajime Takata proposing a 0.25% rate hike.

Japan benchmark interest rate (screenshot). Source: BoJ

Japan’s benchmark rate remains at its highest levels since 1995, with the BoJ meeting result coming just hours after the yen saw snap volatility. Against the US dollar, the currency rose by as much as 3.5% on Thursday, per data from TradingView, in a move that has widely been attributed to central bank intervention

JPY/USD one-day chart. Source: Cointelegraph/TradingView

The BoJ did not officially comment on the latest moves, which coincided with a significant rebound in the South Korean stock market after days of heavy selling concentrated on semiconductor stocks. The Korean won was up by around 1% at the time of writing amid reports of a joint intervention between the BoJ and Korea’s central bank. Analysts referenced “tightly aligned” mutual interests of the two countries as facilitating the joint move.

“The interests of each country aligned. For Korea-Japan cooperation, the won and the yen are so tightly coupled that a joint intervention could double the impact,” Lee Min-hyuk, an analyst at KB Kookmin Bank, commented to local media outlet Straits Times.

The Nikkei newspaper earlier noted that the US had engaged in rate checks — a form of soft intervention which can precede a more pronounced operation — during Thursday’s trading session, resulting in speculation over a three-way coordinated move.