Dollar drops sharply against yen after Bank of Japan quits rate hike

The dollar dropped sharply against the Japanese yen on Thursday, in the first intervention to support its currency since 1998 after the Bank of Japan bucked the trend of other central banks by not hiking interest rates.

The dollar USDJPY dropped quickly after it dropped to 142.20 yen from 144.08 yen on Wednesday, in an action that occurred around the close of the business day in Japan.

Masato Kanda, the vice finance minister for international affairs, was quoted by Bloomberg as saying that the country took bold action in markets. Expectations had been building that Japan might intervene, with its currency falling 23% this year to 24 year lows. Michael Hewson, chief markets analyst at CMC Markets UK said that the big question is whether it will change the long-term direction of the Japanese yen's decline. The Bank of Japan seems keen to defend the 145 146 level, despite the fact that last week's rate check happened around similar levels. The Bank of Japan kept interest rates unchanged, and the Bank of Japan Gov. earlier in the day. Haruhiko Kuroda said it had no plans to keep up with the interest rate hikes from the U.S. Federal Reserve and other central banks. He said the yen's fall was one-sided and driven by speculation. Japan s intervention comes ahead of a market holiday on Friday in which volumes would be expected to be thin. The U.S stock futures ES 00 were higher after the intervention. The dollar's strength has been seen as weighing down risky assets, not just against the yen but against other currencies, including the euro. It has also been a drag on U.S. multinationals.