BOJ Decision Looms as Yen Weakens After Tokyo Intervention

The Japanese yen came under renewed pressure on Friday after a surprise intervention by Tokyo in the currency markets ahead of the Bank of Japan's policy decision. The dollar gained 0.45% to 160.175 in early trades, reversing its previous session's 2.4% drop.

Japan conducted yen-buying and dollar-selling market intervention overnight, pulling the sagging currency from four-decade lows. This move was seen as a good opportunity to intervene, given the weaker dollar and positive risk sentiment, according to Rodrigo Catril, senior FX strategist at National Australia Bank.

The BOJ is widely expected to keep short-term interest rates steady at 1% after hiking in June, with most analysts polled by Reuters expecting another rate hike to 1.25% by year-end. The yen's decline has been attributed to the slow pace of rate hikes and pressure from the US Federal Reserve's decision to leave interest rates unchanged.