Japan on Thursday stepped into the currency market amid the yen’s abrupt fall, the Finance Ministry said, in its first intervention to prop up the currency in 24 years, as rising import costs have been dragging down the country’s household and corporate sectors.

The surprise market operation comes as Prime Minister Fumio Kishida has been urged to take measures to alleviate the negative impact of price hikes, with the public support rating for his Cabinet decreasing recently.

Later Thursday, Finance Minister Shunichi Suzuki said at a press conference that the government intervened in the foreign exchange market on the same day in a bid to stem volatile market moves, although he did not elaborate on the exact timing of the operation.

Suzuki was also mum about whether Japan unilaterally stepped into the currency market.

A currency monitor on Sept. 22, 2022, in Tokyo shows the dollar slipping below 143 yen in an initial response to Japan’s first yen-buying intervention since 1998 to stem the Japanese currency’s further fall as it sank to a fresh 24-year low in the 145 range against the dollar. (Kyodo) ==Kyodo

Before Suzuki’s announcement, Masato Kanda, Japan’s top currency diplomat, told reporters, “We took a decisive step” as speculative moves have been seen in the market, adding, “We will continue to watch foreign exchange moves with a high sense of urgency.”

Earlier in the day, Kanda, a senior Finance Ministry official, said Japan could intervene in the market “anytime” to prevent the yen from plunging further, hours after the currency hit a new 24-year low against the U.S. dollar.

Japan is believed to have sold dollar-denominated assets it holds, such as U.S. Treasuries, to buy the yen, investors said.

On Thursday, the Bank of Japan maintained its ultralow rate policy as widely expected to prop up the pandemic-hit economy, sticking to a dovish stance despite the yen’s sharp decline in a global policy-tightening wave to tackle inflation.

The U.S. Federal Reserve on Wednesday raised its benchmark policy rate by 0.75 percentage point to combat surging inflation, consolidating the view among market participants that the interest rate gap between the United States and Japan will widen further.

The dollar rose above the 145 yen line in Tokyo trading Thursday, its highest level since 1998, before Kanda made the comments.

The yen-buying, dollar-selling operation was carried out after Japanese authorities said all options were on the table in their response to the yen’s rapid depreciation.

Immediately before Kanda announced later Thursday that Japan intervened in the currency market, the dollar plummeted versus the yen. Some traders, however, said the effects of the intervention might be limited, given the BOJ’s drastic monetary easing.

BOJ Governor Haruhiko Kuroda said at a press conference after its two-day policy meeting that the central bank will not lift interest rates for the next two or three years.

A falling yen is usually a boon for exports as Japanese products become cheaper abroad, increasing the value of overseas revenues in yen terms, but it drives up import prices. Japan depends on imports for more than 90 percent of its energy needs.

Japan’s core consumer prices soared 2.8 percent to a nearly eight-year high in August, government data showed Tuesday, in the latest sign of cost-push inflation without wage growth.

The Japanese government last conducted yen-selling, not yen-buying, intervention in October and November 2011, after the currency hit a postwar high of 75.32 to the dollar. In March of that year, a devastating earthquake struck northeastern Japan.

After Shinzo Abe became Japan’s prime minister in December 2012, the yen was on a downward trend against a backdrop of his economic policy, dubbed “Abenomics,” including aggressive monetary easing, massive fiscal spending and growth strategy.

On Thursday, Japan intervened in the market to buy the yen for the first time since 1998, when the country’s economy experienced a slump after the consumption tax was raised to 5 percent from 3 percent the previous year.

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