FirstFT: Japan intervenes to strengthen the yen

Good morning Japan intervened to strengthen the yen for the first time in 24 years as a trio of European central banks hiked interest rates, underscoring inflation’s destructive impact on currencies and monetary policy.

Rising inflation to multi-decade highs in much of the world has caused the cost of borrowing to soar, with currency markets reeling. This, in turn, has triggered what economists are calling a “reverse currency war,” with central banks attempting to prop up their exchange rates against the dollar through intervention or rate hikes.

The latest moves, which included rate hikes in the UK, Switzerland and Norway, came a day after the US Federal Reserve announced its third consecutive 0.75 percentage point rate hike.

Turkey’s central bank, however, moved in the opposite direction and continued its unorthodox policy, cutting its one-week repo rate from 13 percent to 12 percent, despite inflation rising to over 80 percent last month. The lira fell to a record low against the dollar.

Stocks and government bond prices fell on Thursday as more of the world’s central banks joined the US Federal Reserve in raising interest rates.

• go deeper: While Japanese officials may become more nervous about a weak yen, its implications are far more nuanced now than in years past.

Do you think the Bank of Japan was right to intervene to strengthen the yen? Tell me what you think [email protected] or click “Reply” in this email. – Emily

Five more stories in the news

1. US senators pressure Apple over possible Chinese chipmaker deal The Democrat and Republican vice-chairmen of the Senate Intelligence Committee have asked the intelligence community to investigate the threat a potential deal between Apple and Chinese chipmaker Yangtze Memory Technologies Co poses to national security as political pressure escalates iPhone manufacturer.

2. Russia’s Lavrov trades barbs with Western officials Russian Foreign Minister Sergei Lavrov has faced the Western powers in the UN Security Council to defend the Russian invasion of Ukraine. Lavrov, who was late for the meeting and left after speaking to the council for about 20 minutes, denied that Russia had committed war crimes and blamed Ukraine and its Western backers for the conflict.

• Read relatives: Russia has released a number of prisoners, including British and Americans, after mediation by Saudi Arabian Crown Prince Mohammed bin Salman

3. Twelve die as Iran cracks down on protests The death of 22-year-old Mahsa Amini in police custody has sparked the largest anti-regime protests since 2019. Of the 12 people killed in the protests, at least five were members of the security forces, officials said, as authorities stepped up their crackdown on the protests.

4. The DoJ may resume review of the Mar-a-Lago files A US appeals court has allowed the Justice Department to continue examining classified documents seized in a search of Donald Trump’s Mar-a-Lago home, marking a victory for law enforcement officials in their legal battle with the former president.

5. Credit Suisse is considering splitting the investment bank into three Credit Suisse has drawn up plans to split its investment bank into three and revitalize a “bad bank” stop for risky assets as the Swiss lender tries to bounce back from three years of scandals.

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the following days

Inflation data for Malaysia The country’s August CPI data will be released today. Use our inflation tracker to see how your country is doing as prices rise.

HSBC raises interest rates in Hong Kong Homeowners and businesses in the financial hub, which hosts one of the most expensive real estate markets in the world, will face higher costs as the bank implements a hike today for the first time in four years.

UK mini budget New Chancellor Kwasi Kwarteng is due to unveil a mini-budget later today, with tax cuts at the heart of an attempt to boost economic growth to 2.5 percent.

Parliamentary elections in Italy The Italians will go to the polls after Mario Draghi’s resignation in July. If the polls are right, Italy will emerge from Sunday’s general elections with a new far-right government led by arch-conservative Giorgia Meloni, President of the Brothers of Italy.

Join us on September 26th Technology and Policy Forum in partnership with ETNO to hear from industry CEOs, policymakers and investors in Brussels to map future policy and rulemaking in EU digital markets. Sign up here to join the discussion in person or online.

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Donations to Trump’s Super Pac are slowing significantly Make America Great Again! Super Pac, the only active Super Pac linked to Trump, raised just $40 in August after raking in $351,000 in July and zero in June. In April and May, the group had raised more than double that amount, totaling $864,000.

Books

The six titles eligible for FT’s 2022 Business Book of the Year award address “some of the toughest and most important issues facing global capitalism,” said Roula Khalaf, FT Editor and Jury Chair. See which titles made the shortlist.