Peak dollar rebounded against Japanese Yen For two decades on Wednesday, the Bank of Japan moved into the market again to defend ultra-low interest rates, in contrast to more Federal Reserve officials pushing for a significant rate hike.
The dollar reached 129.43 yen for the first time since April 2002, before easing back to fall 0.21% at 128.615.
The Bank of Japan once again offered to buy unlimited amounts of government bonds, to stem the rise in Japanese 10-year bond yields, which were approaching the 0.25% tolerance cap.
Japanese Finance Minister Shunichi Suzuki issued the most stark warning yet on Tuesday, saying that the damage to the economy from a weak currency at the moment is more than the benefits.
The dollar’s rise against the yen came as US Treasury yields rose, and 10-year bond yields reached 2.981% for the first time since December 2018 in Tokyo trading.
The dollar index, which measures the greenback against six major peers including the yen, matches Tuesday’s high of 101.03, a level not seen since March 2020, before retreating to 100.76.
The dollar touched 0.9535 franc for the first time since June 2020 before easing back slightly at 0.9513.
The euro rose 0.22% to $1.0812, still not far from last week’s low of $1.0758, the weakest in nearly two years.
The Australian dollar jumped 0.58% to $0.7420, extending its recovery from a one-month low of $0.7343 reached on Monday.
On the other hand, China surprisingly kept benchmark lending rates for businesses and households steady on Wednesday, reversing the global trend of monetary tightening at a time when major economies struggle with inflation.
The Chinese yuan hit its weakest level since October 2021, at 6.4115 per dollar.