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Japan forced to prop up yen after bank keeps to negative interest rates

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Japan has intervened to prop up the yen for the first time since 1998, after it hit a 24-year low as its central bank resisted the trend for higher interest rates.Tokyo was forced to take action in the foreign exchange market to shore up its weakening currency, after the Bank of Japan (BoJ) maintained its ultra-loose monetary policy on Thursday.The Japanese government sold US dollars after the yen slumped past the 145 mark against the dollar, on the back of the BoJ’s decision to leave its benchmark rates in negative territory, on a day when other central banks increased borrowing costs in an attempt to cool inflation.Japan’s vice-finance minister for international affairs, Masato Kanda, told reporters the government had “taken decisive action” to address the yen’s sudden fall on the foreign exchange market.The intervention, which lifted the yen by 2% against the dollar back to 141.2, showed that Tokyo had lost patience with the currency’s steady slide and highlighted the impact that the surging US dollar is having on major economies.The prime minister, Fumio Kishida, said Japan would respond decisively to excessive fluctuations in the currency market.Analysts warned, though, that the intervention could be ineffective as long as the BoJ maintained its policy of ultra-low interest rates at a time when other central banks are tightening.“The timing of this was very poor,” said Fawad Razaqzada, a market analyst at City Index and Forex.com. “More to the point, is the BoJ undoing the government’s attempt to shore up the yen?”The dollar had hit a new 20-year high against a basket of currencies before Tokyo’s intervention, after the Federal Reserve raised US interest rates by 0.75 percentage points on Wednesday, its third 75

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