Asian Stocks Rise as Oil Prices Dip, Yen Wobbles Ahead of BOJ Meeting

Asian stocks rose on September 18 as policymakers around the world took steps to combat inflation. The rally was fueled by a drop in oil prices, which fell 1% to $103.77 per barrel due to hopes of alternative supply routes from the Middle East.

The US Federal Reserve had raised interest rates for the first time in three years on September 16 and signaled further hikes were coming. This sent a signal to markets that policymakers are serious about tackling inflation, which is driven by high oil prices above $100 per barrel.

The Bank of England warned on September 17 that it may have to hike rates if the Middle East war continues, while the European Central Bank last week cautioned the need for further tightening as it raised rates.

Japan's central bank, the BOJ, is expected to raise interest rates to a 31-year high and pledge to deliver more to counter inflation risks. The yen softened to 156.23 per US dollar ahead of the decision, which is seen as crucial in determining the path of future rate hikes.

Currency strategists at MUFG and Commonwealth Bank of Australia cautioned that a single interest rate hike may not be enough to support the yen, and Governor Ueda's communication will be key in convincing markets that the BOJ is committed to hiking rates at a faster pace.