The dollar jumped two yen from a 15-year low after Japan intervened to sell yen for the first time in six years, in a move traders said would only buy it time in slowing the yen's persistent rise. The intervention helped send the euro, Australian dollar and sterling 2 percent higher on the day against the Japanese currency, although it was not clear whether Japan had bought anything other than dollars.
Finance Minister Yoshihiko Noda said Japan intervened in the currency market as the impact of the yen's rise on the economy could not be ignored and that Japan would continue to take action, but that it had been acting solo. The Bank of Japan acts for the Ministry of Finance in intervention, which traders said continued in the Asian session after the initial bout at around 83.00 yen per dollar which came shortly after the dollar hit a 15-year low of 82.87 yen.
The dollar rose 2.4 percent to 85.05 yen, while the euro climbed 2.2 percent to 110.34 yen. Traders said Japan may want to bring the dollar up to around 85 yen. The Bank of Japan started buying the dollar from around 10:30 am (0130 GMT). It also said it would provide ample funds to markets while keeping very easy monetary conditions.
The 85 yen could be a target for Tokyo as many Japanese exporters want to sell the dollar above that level before their half-year book-closing at the end of this month. It was Japan's first currency market intervention since March 2004, when it capped a 15-month campaign to sell the yen. Then it sold a total of 35 trillion yen. The yen had gained fresh momentum on Tuesday after Japanese Prime Minister Naoto Kan won a leadership ballot against a rival seen as more willing to intervene against the yen. The dollar was also hurt early on by talk that the Federal Reserve could be nearing more quantitative easing but it edged higher on the euro, which slipped 0.2 percent to $1.2978.
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