Yen slides on BoJ's 'intervention'

THE yen slid by more than 1% overnight as foreign exchange dealers speculated that the Bank of Japan had once more waded into the market to block the rise of the currency.

Though the Tokyo Finance Ministry refused to confirm the central bank had intervened with a yen-selling initiative, the move seems likely after the dollar soared from a three and a half month low of 115.75 yen at the beginning of Far Eastern trading to change hands at 116.78 yen by the time London markets opened.

The Japanese government is reckoned to have already spent nine trillion yen (£50bn) to prevent the yen appreciating through the 115 yen threshold, a level at which the currency really begins to hurt Japanese exporters and threatens to derail the economy again.

The news came as US Treasury Secretary John Snow was in Thailand saying he would keep pushing Asian nations to adopt more-flexible currency policies, saying that doing so was the best protection against potential economic crises in the region.

In London, forex dealers' eyes were on interest rate decisions due today from the monetary policy committee and the European Central Bank.