The dollar rose more than 3 percent against the yen on Wednesday as Japan intervened to weaken its currency for the first time in six years, kicking off what could be a sustained effort to limit yen strength. Dealers said the Bank of Japan spent close to $20 billion to weaken the currency against the dollar, which staged its biggest daily gain against the yen in nearly two years.
By mid-morning in New York, the dollar had climbed as high as 85.72 yen, up from a 15-year low beneath 83 yen. It last traded at 85.63 yen. The euro, sterling and Australian dollar also soared as a result of the Japanese intervention, which the Ministry of Finance said was carried out without any foreign assistance.
New York traders said a weaker dollar-yen trend would remain intact until the dollar tests 86.70, the 38.2 percent retracement of its June-to-September decline. The euro rose 3.2 percent to 111.40 yen, on track for its best day since February 2009, while the Australian dollar rose 3.3 percent and sterling 3.7 percent. The euro fell 0.1 percent to $1.3008.
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