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 raised interest rates, underlining the disruptive impact of inflation on currencies and monetary policy.

Inflation’s rise to multi-decade highs in much of the world has led to sharp increases in borrowing costs, with foreign exchange markets whipsawing. This in turn has set off what economists call a “reverse currency war” in which central banks seek to shore up their exchange rates against the dollar, through intervention or interest rate rises.

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

However, Turkey’s central bank moved in the opposite direction, continuing its unorthodox policy by slashing its one-week repo rate from 13 per cent to 12 per cent despite inflation rising above 80 per cent 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 be growing more nervous about a weak yen, its effects 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 at [email protected] or hit reply on this email. — Emily

Five more stories in the news

1. US senators pressure Apple over possible Chinese chipmaker deal The Democratic chair and Republican vice-chair of the Senate intelligence committee have asked the intelligence community to examine the threat a potential deal between Apple and the Chinese chipmaker Yangtze Memory Technologies Co poses to national security, in an escalation of the political pressure being applied to the iPhone maker.

2. Russia’s Lavrov trades barbs with western officials Russian foreign minister Sergei Lavrov faced off against western powers at the UN security council in defending Russia’s invasion of Ukraine. Lavrov, who arrived late to the meeting and left after addressing the council for about 20 minutes, denied Russia had committed war crimes and blamed Ukraine and its western backers for the conflict.

• Related read: Russia has released a number of prisoners, including Britons and Americans, after mediation by Saudi Arabia’s Crown Prince Mohammed bin Salman

3. Twelve die as Iran cracks down on protests The death of 22-year-old Mahsa Amini in policy custody has resulted in the biggest 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 step up their crackdown on the protests.

4. DoJ allowed to resume examination of Mar-a-Lago files A US appeals court has allowed the Department of Justice to continue investigating classified documents seized during the search of Donald Trump’s Mar-a-Lago residence, in a victory for legal authorities in their legal tussle with the former president.

5. Credit Suisse weighs splitting investment bank into three Credit Suisse has drawn up plans to split its investment bank into three and resurrect a “bad bank” holding pen for risky assets, as the Swiss lender attempts to emerge from three years of scandals.

Did you keep up with the news this week? Take our quiz.

The days ahead

Malaysia inflation data The country’s August consumer price index data will be released today. Use our inflation tracker to see how your country compares on rising prices.

HSBC raises lending rate in Hong Kong Property owners and businesses in the financial hub, which is home to one of the world’s most expensive property markets, will face higher costs as the bank implements a rise today for first time in four years.

UK mini-Budget The new chancellor Kwasi Kwarteng will present a mini-Budget later today, with tax cuts the centrepiece of an attempt to boost economic growth to 2.5 per cent.

Italy general election Italians will go to the polls following the resignation of Mario Draghi in July. If polls are correct, Italy will emerge from its general election on Sunday with a new far-right government led by arch-conservative Giorgia Meloni, president of the Brothers of Italy.

On September 26, join our Tech & Politics Forum in partnership with ETNO to hear from industry CEOs, policymakers and investors in Brussels to map future policies and rulemaking in EU digital markets. Register here to join the conversation in person or online.

What else we’re reading

Saudi Arabia and the US are drifting back on to the rocks Joe Biden’s embarrassment at fist bumping Mohammed bin Salman in July would have been worth it if it had undercut Vladimir Putin’s Russia, says Edward Luce. No such result has been visible, he says. Can the US president do anything to dissuade Saudi Arabia from being a recurring thorn in America’s side?

The airline industry is in trouble Is bottomless caviar the answer? Lobster thermidor, Michelin star chefs and recipes that come with non-disclosure agreements: take a look inside the test kitchens of the world’s most experimental airlines.

The five things the tech bubble got right As the tech entrepreneur Paul Graham wrote in a brilliant essay in the aftermath of the first dotcom crash, stock market investors were right about the direction of travel even if they were wrong about the speed of the journey. That idea is worth revisiting as investors watch the Nasdaq’s fall and survey the wreckage of special purpose acquisition companies.

Bitcoin can’t be separated from crypto Why do the “bitcoin maximalists” claim bitcoin is not a cryptocurrency? One can see why they might be keen to distance themselves from cryptoland scams. But their arguments don’t stand up, writes Jemima Kelly.

Donations to Trump’s super Pac slow significantly The Make America Great Again, Again! super Pac, which is the only active super Pac affiliated with Trump, raised just $40 in August, after bringing in $351,000 in July and zero in June. In April and May, the group had raised more than double that amount, with $864,000 in total contributions.

Books

The six titles up for FT’s 2022 Business Book of the Year Award tackle “some of the toughest and most important issues facing global capitalism”, said Roula Khalaf, FT editor and chair of judges. See which titles made the shortlist.