BOJ Faces Tough Task Convincing Markets of Tighter Policy Stance Amid Yen Volatility

The Japanese yen remains in focus as it continues to trade stronger at 156.64 against the US dollar after losing about 2% last week.

Market attention has increased further with reports that Japanese officials have carried out rate checks, a move widely regarded by traders as a possible step before direct intervention.

The Bank of Japan raised its policy rate on Friday to 1.25%, its highest level in 31 years, but the move failed to provide lasting support to the yen.

HSBC Chief Asia Economist Fred Neumann said that the BOJ faces a difficult task in convincing markets of its willingness to maintain a tighter policy stance.