Japan intervened to support the yen for the first time since 1998, seeking to stem a 20% decline against the dollar this year amid a widening policy divergence with the U.S.
The yen rose as much as 2.3% against the dollar, pulling back sharply from the lows of the day when it had breached a key psychological level of 145, as top currency official Masato Kanda said the government was taking "bold action.”
The intervention, coming after the Bank of Japan insisted it will hold its negative-rate policy even as the Federal Reserve hikes aggressively, indicates how a pain threshold had been reached as hedge funds kept adding to short bets on the yen. The question now is whether the unilateral action will work.