SINGAPORE: The yen was on track for its first weekly gain in more than a month on Friday, after Japanese authorities intervened in foreign exchange markets for the first time since 1998, while a soaring dollar kept other currencies close to multi-year lows.
The yen rose about 0.1 percent to $142.24 per dollar in early Asian trading, although trading with Japan was thin on a holiday.
The yen rose more than 1 percent, reaching a low of 140.31 on Thursday after news that Japan had bought the yen to defend its battered currency.
The move, which took place in the late Asia hours, came after the Bank of Japan held onto its ultra-low interest rates, pushing the yen to a new 24-year low, sliding past $145 a dollar in the aftermath.
“As[the BOJ]is going against the grain of rising interest rates, to have any chance of success, they will have to be in this for the long term,” said Ray Attrill, head of FX strategy at National Australia Bank.
“My sense is that the law of diminishing returns will kick in as far as intervention is concerned.”
Meanwhile, the pound gained 0.05 percent to $1.12645, but did not stay far from the new 37-year low of $1.1213 reached in the previous session and was little helped by a 50 basis point rate hike by the Bank. of England overnight.
The euro, Aussie and kiwi also languished near new lows on Friday in the face of a rising dollar, which was boosted by a very aggressive Federal Reserve and rising government bond yields that kept the dollar in demand.
Benchmark yields on 10-year Treasuries hit an 11-year high of 3.718 percent overnight, while two-year yields remained well above 4 percent, most recently at 4.1223 percent.
“Ironically, I think the overnight rise in U.S. Treasury yields, especially the 10-year area, is a direct result of the view that the Bank of Japan will have to sell Treasury bonds to deliver the dollars. to intervene … outside the dollar/yen it will make the dollar even more attractive against other currencies,” Attrill said.
The US dollar index rose to 111.27, hovering near a two-decade high of 111.81 in the previous session, and is on track for a weekly gain of 1.5 percent.
The euro rose marginally 0.02 percent to $0.9836 after falling overnight to a new 20-year low of $0.9807.
Flash September purchasing managers indices for the euro-zone, the UK and the United States are expected later on Friday, providing a better overview of the obscuring global outlook.
The Aussie gained 0.11 percent to $0.6649, while the kiwi was 0.05 percent higher at $0.5849, both losses in nursing after falling to their lowest level since 2020 during the previous session.