Japan stepped in, buying yen in the forex market on Friday

TOKYO, Oct 22 (Reuters) – Japan intervened in the foreign exchange market on Friday to buy the yen for the second time in a month after the currency hit a 32-year low of nearly 152 to the dollar, said a government official and another person familiar with the matter told Reuters.

Japan has tried to shore up the battered currency as the central bank sticks to ultra-low interest rates, bucking a global trend of monetary policy tightening and widening the gap between U.S. interest rates and Japanese.

After the dollar hit 151.94 yen, its highest since 1990, the intervention sent the Japanese currency down over 7 yen to a low of 144.50 yen. The US currency was last down 1.8% at 147.34 yen.

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The Ministry of Finance (MOF) intervened in several stages from around 9:35 p.m. (12:35 GMT), a source said.

“We maintain our position of being ready to take appropriate action against excessive forex volatility,” Prime Minister Fumio Kishida told reporters on Saturday after meeting Australian Anthony Albanese, reiterating that such volatility cannot be tolerated.

Kishida declined to comment further, saying, “I won’t comment in detail on forex” when asked about Friday’s intervention.

Japan’s top monetary diplomat, Masato Kanda, also declined to say whether the finance ministry had intervened.

“We will not comment now on whether or not we carried out an intervention,” Kanda, deputy finance minister for international affairs, told Reuters on Saturday, saying it was a position the finance ministry had stood by. over the past few weeks.

He added that the ministry would not confirm whether an intervention took place for some time, flagging a possible “stealth intervention” to engage in a war of nerves against investors selling yen.

The MOF also bought yen on Sept. 22 as investors focused on the growing divergence between the BOJ’s ultra-loose monetary policy and the US Federal Reserve’s aggressive rate hikes.

Finance Minister Shunichi Suzuki and Kanda have repeatedly signaled the government’s willingness to intervene, warning against excessive volatility. Suzuki said before the intervention on Friday that authorities were prepared to act “strictly” against speculators.

Many market participants doubt that Tokyo can reverse the yen’s bearish trend with solo intervention, even with Japan’s $1.33 trillion in foreign exchange reserves.

Industrial powers in the Group of Seven agreed this month to closely monitor recent volatility, but did not indicate they were ready for a joint intervention.

Japan bought a record 3.6 trillion yen ($24 billion) in September action, Tokyo money market brokerage firms estimated.

($1 = 147.6400 yen)

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Reporting by Shinji Kitamura, Yoshifumi Takemoto, Tetsushi Kajimoto, Kiyoshi Takenaka and Kentaro Sugiyama; Written by Sakura Murakami and Leika Kihara; Editing by William Mallard

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