TOKYO –
The yen strengthened by more than 1 yen against the dollar in a short period late on September 18 after the Bank of Japan conducted a rate check, a step commonly taken in preparation for possible intervention in the foreign exchange market.
The sharp move began shortly after 11:30 p.m. Japan time. At around 11:40 p.m., the yen started strengthening rapidly, gaining more than 1 yen against the dollar within about an hour and briefly reaching the upper 156 yen range.
Earlier on September 18, the Bank of Japan decided to raise interest rates for the first time in about 31 years. Despite the decision, the yen initially weakened, trading in the 157 yen to 158 yen range against the dollar.
Market participants said the BOJ carried out a rate check as the yen continued to move in the weaker direction following the rate increase.
A rate check involves the government and the Bank of Japan contacting financial institutions to confirm current exchange-rate levels before potentially carrying out direct intervention in the currency market.
The move is widely seen as an attempt to warn market participants against pushing the yen lower after the currency weakened despite the BOJ’s historic rate increase.
Source: TBS
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