Last Updated on September 22, 2022 by Bitfinsider

In response to the central bank’s decision to maintain the historically low interest rates that have been devaluing the yen, Japan intervened in the currency market on Thursday (Sept. 22) to support the battered currency for the first time since 1998.

The confirmation of the intervention caused the dollar’s decline against the yen to continue, and it was last down more than 2% at 141.15 yen. It had previously traded more than 1% higher in relation to the Japanese yen, which hit brand-new 24-year lows.

The action comes shortly after the BOJ decided to defy the worldwide trend of monetary tightening by central banks seeking to control skyrocketing inflation by keeping super-low interest rates in place to bolster the nation’s shaky economic recovery.

The BOJ made its decision after the US Federal Reserve raised rates for the third time in a row by 75 basis points on Wednesday and hinted that there might be more increases in the future. This strengthened the Fed’s willingness to fight inflation head-on and strengthened the dollar.

The BOJ kept policy extremely slack while several of its international rivals, such as the Federal Reserve, rapidly hiked rates to slow down surging prices, causing the yen to weaken by almost 20% this year.

At a two-day meeting that ended on Thursday, the BOJ made the largely anticipated decision to maintain record-low interest rates while leaving unaltered its commitment to keep them at “present or lower levels.”

Interventions in the yen market have been quite infrequent. When the Asian financial crisis caused a yen sell-off and a swift capital drain from the region in 1998, Japan intervened last to defend its currency.

Before that, in 1991–1992, Tokyo stepped in to stop yen declines.