Asian Currencies Strengthen Amid Yen's Seven-Month High

The Japanese yen has reached its highest level in seven months, appreciating by approximately 4.5% from around 160 per dollar early last week. The USD/JPY pair fell by 0.7% to 153.34 after the yen strengthened as much as 152.89, a level not seen since February. This surge is attributed to growing expectations for faster Bank of Japan tightening and potential repatriation of Japanese investment funds.

Market analysts now price around a 75% chance of a 25-basis-point BOJ hike on September 18, with a 60% probability of another increase by December. The stronger-than-expected growth in Japan's economy adds to the case for further BOJ tightening.