Apr 20, 2022 02:41AM ET
By: AnalysisWatch
The dollar climbed to a new two-decade peak against the yen on Wednesday, boosted by the Bank of Japan re-entering the market to defend its ultra-low interest rate policy, in defiance of increasing numbers of Federal Reserve officials pushing for significant rate increases.
The dollar rose to 129.43 yen for the first time since April 2002, before falling 0.21% to 128.615.
The BOJ again offered to buy unlimited amounts of Japanese government bonds to curb the rise in Japan's 10-year interest rate, which was bumping up against its 0.25% tolerance ceiling.
The policy differences have led many analysts to say that the yen's rapid decline is not unwarranted, even if it poses risks for currency intervention.
The dollar's rally against the yen comes at a time when U.S. government bond yields are rising, with the 10-year yield reaching 2.981% in Tokyo trading for the first time since December 2018.
At the start of the day, the dollar index, which measures the currency against six major peers, including the yen, matched Tuesday's high at 101.03—a level not seen since March 2020—before dropping back to 100.76.
The greenback touched 0.9535 francs for the first time since June 2020, before trading slightly weaker at 0.9513.
The Australian dollar rose 0.58% to $0.7420, continuing its rise from a one-month low at $0.7343, reached on Monday, after Tuesday's minutes from the Reserve Bank of Australia's latest meeting showed that the first rate hike in more than a decade had been "brought forward" by accelerating inflation and a tightening labor market.