Yen Slides Most in Three Years After Japan Intervenes

The yen slumped the most since 2008 against the dollar as Japan stepped in to foreign-exchange markets to weaken the currency for the third time this year after its gain to a postwar record threatened exporters.

The dollar rose against all its major peers after MF Global Holdings Ltd. filed for bankruptcy after making bets on European sovereign debt, driving stocks down and boosting refuge demand. The yen fell against all of its most-traded counterparts tracked by Bloomberg after Japan’s Finance Minister Jun Azumi ordered the intervention.

“Certainly this is an extremely large intervention,” said Alan Ruskin, global head of Group-of-10 foreign-exchange strategy at Deutsche Bank AG in New York. “The effect is slowly dissipating. Is this a one-day foray?”

The yen depreciated 2.8 percent to 78 per dollar at 1:14 p.m. New York time, after touching the post-World War II high of 75.35. Japan’s currency has dropped 1.2 percent in October. The yen declined 1.3 percent to 108.62 per euro and weakened 1.8 percent to 82.63 per Australian dollar. The euro fell 1.6 percent to $1.3928, paring this month’s rally to 4.1 percent. The franc gained 0.3 percent to 1.2173 per euro.

Japan’s currency earlier today dropped more than 4 percent after the intervention. That’s the biggest decline on an intraday basis since a 6.1 percent plunge on Oct. 28, 2008, three days before the Bank of Japan cut its target lending rate.

The dollar rose 1.4 percent to 1.6953 Brazilian reais today as a drop in stocks reduced demand for high-yielding assets. The greenback increased 1.6 percent to 13.2034 Mexican pesos.