Yen surges after Japan intervenes with first support since 1998



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"We have taken decisive action," says Japan's Kanda

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Dollar/yen has widest spread between daily high, low since 2016

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Sterling, Swiss franc, Norway's crown slide after rate hikes

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Dollar hits new multi-year high vs sterling, euro

By Alun John, Gertrude Chavez-Dreyfuss and Harry Robertson

LONDON/NEW YORK, Sept 22 (Reuters) - The Japanese yen jumped across the board on Thursday after monetary authorities intervened in the foreign exchange market to boost the battered currency for the first time since 1998, although analysts said Japan may struggle to keep the yen strong for long.

The dollar was last down 1.5% at 141.91 yen JPY=EBS . It hit a low of 140.31 after the intervention, having earlier reached a fresh 24-year peak of 145.9 yen. The spread between the day's high and low for the pair was the widest since June 2016.

The euro, Australian dollar and pound also plunged against the Japanese currency, before regaining a little ground. EURJPY=EBS AUDJPY=EBS GBPJPY=EBS

"We have taken decisive action," Japan's Vice Finance Minister for international affairs Masato Kanda told reporters, responding in the affirmative when asked if that meant intervention.

Confirmation of the intervention came just hours after the BOJ decided to maintain low interest rates to support the country's fragile economic recovery.

BOJ Governor Haruhiko Kuroda told reporters the central bank could hold off on hiking rates or changing its dovish policy guidance for years.

In contrast, central banks around the world, most notably the U.S. Federal Reserve, are raising rates aggressively and the policy divergence has weighed on the yen.

However, analysts said Japan can't keep propping up the currency on a sustained basis.

"Over the next three to six months or possibly even longer, as long as those diverging paths of monetary policy are still in place and those differences persist, you'll continue to see a weaker yen," said Brendan McKenna, international economist and FX Strategist at Wells Fargo Securities.

"Yields in the U.S. today are up almost six basis points or so and yields in Japan are down. So I think if anything the spread should continue to favor the U.S. dollar as we go forward, and that's something that will continue to result in a weaker yen through the end of this year and probably into early 2023," he added.

The U.S. 10-year yield hit 3.68%, the highest since February 2011. It was last up 16 basis points at 3.674 US10YT=RR .

Even after Thursday's moves, the dollar is still up 23.2% against the yen this year.

CENTRAL BANK BONANZA

In a very busy day for markets, the pound pared the small advance it had made in London trading after the Bank of England raised interest rates by 50 basis points.

The hike was in line with expectations but markets had been pricing in a small chance of a larger 75 bp move.

Sterling was last 0.2% higher against the dollar at $1.1295 GBP=D3 , not too far from a fresh 37-year low of $1.1213, hit in Asia trading.

"I'm quite surprised that the bank didn't take this opportunity to go 75 bps, particularly given the cover from some of the other global central banks. The pound looks particularly vulnerable here if the bank stays behind the curve," said Hugh Gimber, global markets strategist at JP Morgan Asset Management.

The euro EUR=EBS was little changed at $0.9838, recovering from a new 20-year trough hit earlier in the global session.

The dollar index =USD - which measures the greenback against a basket of six other major currencies - was down 0.3% at 111.17, sliding from a 20-year high of 111.81 hit early in the day following the conclusion of the Fed's policy meeting on Wednesday.

The U.S. central bank issued new projections showing rates peaking at 4.6% next year with no cuts until 2024. It raised its target interest rate range by another 75 basis points (bps) overnight to 3%-3.25%, as was widely expected.

The dollar was already supported by demand for safe-haven assets after Russian President Vladimir Putin announced he would call up reservists to fight in Ukraine.

Separately, the Swiss franc tumbled after Switzerland's central bank raised rates by 75 bps, when some had talked up the possibility of a full percentage point move.

The dollar and euro both climbed roughly 1.5% against the franc, with the dollar last at 0.9808 francs CHF=EBS and the euro at 0.9647 francs. EURCHF=EBS

The Norwegian crown eased against the euro after the central bank there hiked interest rates by an expected 50 bps, and said there may be a more gradual approach to tightening ahead.

The euro was last up 0.5% at 10.2205 crowns EURNOK= .

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Currency bid prices at 10:43AM (1443 GMT) Description

RIC

Last

U.S. Close Pct Change

YTD Pct

High Bid

Low Bid

Previous

Change

Session

Dollar index

=USD

111.2700

111.4700

-0.16%

16.315%

+111.8100 +110.4600 Euro/Dollar

EUR=EBS

$0.9825

$0.9838

-0.14%

-13.58%

+$0.9908

+$0.9807 Dollar/Yen

JPY=EBS

141.8850

144.1050

-1.53%

+23.26%

+145.8900 +140.3100 Euro/Yen

EURJPY=

139.41

141.73

-1.64%

+6.98%

+143.7000 +138.7200 Dollar/Swiss

CHF=EBS

0.9806

0.9663

+1.45%

+7.47%

+0.9849

+0.9622 Sterling/Dollar GBP=D3

$1.1276

$1.1270

+0.06%

-16.62%

+$1.1363

+$1.1213 Dollar/Canadian CAD=D3

1.3488

1.3466

+0.15%

+6.67%

+1.3544

+1.3410 Aussie/Dollar

AUD=D3

$0.6633

$0.6633

+0.00%

-8.75%

+$0.6670

+$0.6574 Euro/Swiss

EURCHF=

0.9634

0.9507

+1.34%

-7.09%

+0.9715

+0.9468 Euro/Sterling

EURGBP=

0.8711

0.8729

-0.21%

+3.70%

+0.8759

+0.8692 NZ

NZD=D3

$0.5845

$0.5853

-0.02%

-14.50%

+$0.5887

+$0.5806 Dollar/Dollar

Dollar/Norway

NOK=D3

10.4125

10.3560

+0.46%

+18.10%

+10.4175

+10.2930 Euro/Norway

EURNOK=

10.2305

10.1766

+0.53%

+2.17%

+10.2492

+10.1386 Dollar/Sweden

SEK=

11.0818

11.0627

+0.07%

+22.89%

+11.1375

+10.9718 Euro/Sweden

EURSEK=

10.8836

10.8759

+0.07%

+6.35%

+10.9290

+10.8530



World FX rates Link
Japan's history of yen interventions Link



Reporting Alun John and Harry Robertson in London, Gertrude Chavez-Dreyfuss in New York and Kevin
Buckland in Tokyo; Additional reporting Bansari Mayur Kamdar in Bengalaru; Editing by Kirsten Donovan

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