Kiwi jumps 1.8% vs yen as Japan intervenes to drive down its currency

Wednesday 15th September 2010

The New Zealand dollar spiked 1.8% to as high as 61.91 yen today after Japan confirmed it intervened in the foreign exchange market to drive down the value of its currency.

Finance Minister Yoshihiko Noda told reporters in Tokyo the government intervened to provide some relief to exporters who were hurting from a 15-year high in the currency at 82.88 yen per US dollar, according to a Bloomberg report.

That comes a day after Prime Minister Naoto Kan saw off a challenge to his leadership by Ichiro Ozawa, a policymaker deemed more likely to intervene in the currency.

The Bank of Japan said in a statement on its website that there has been "growing uncertainty about the future, especially for the US economy, and foreign exchange and stock markets have been unstable. In these circumstances, the downside risks to Japan's economy warrant attention."

The BOJ "strongly expects that the action taken by the Ministry of Finance in the foreign exchange market will contribute to a stable foreign exchange rate formation".

"This has certainly taken the market by surprise, especially how soon it has occurred after Kan's re-election," said Ben Potter, research analyst at IG Markets in Melbourne.

"This decisive move is sure to please equity markets, especially large cap Japanese exporters. The big question now is whether or not there is more selling to come?"

The kiwi recently traded at 61.81 yen, while the yen eased to 84.35 per US dollar.

Businesswire.co.nz

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