Asian Currencies Rise as Yen Hits Seven-Month High
Asian currencies fared well against the US dollar on Tuesday, with the Japanese yen hitting a seven-month high. The yen's strength was attributed to growing expectations of faster Bank of Japan tightening, repatriation of Japanese investment funds, and unwinding of carry trades. This has driven markets to price around a 75% chance of a 25-basis-point BOJ hike on September 18.
The yen climbed as high as 152.89, its strongest level since February, after reaching levels that were also seen during Japan's July intervention. Japan's economy grew at an annualized 1.4% in the April-June quarter, revised up from 1.1%, adding to the case for further BOJ tightening.
The yen has gained roughly 4.5% from around 160 per dollar early last week. Japanese Finance Minister Satsuki Katayama said Tokyo's approach to currencies had not changed since its joint intervention with the United States and that she would remain in close contact with Treasury Secretary Scott Bessent.
Other Asian currencies, such as the South Korean won, also saw gains due to foreign inflows into Korean equities and a rally in semiconductor stocks. The Chinese yuan remained firm near a 3½-year high, while the Australian dollar weakened slightly due to concerns over household finances.