BoJ Expectations Fuel Yen's Rise Amid Interest Rate Hike Bets

The Japanese Yen (JPY) has outperformed this week against major currencies, driven by expectations that the Bank of Japan (BoJ) will continue to tighten monetary policy.

Despite a sharp decline on Thursday, the JPY rebounded against the US Dollar (USD) on Friday, with USD/JPY down 0.3% to near 154.00 at the time of writing.

Analysts at MUFG attribute the Yen's strength to 'likely positioning adjustments ahead of upcoming risk events, coupled with ongoing market pricing on a faster pace of monetary policy tightening by the Bank of Japan.'

The BoJ is expected to raise interest rates by 25 basis points (bps) to 1.25% at its meeting next week, its highest level in 31 years.