BoJ Hawkishness Falls Short of Sustaining Yen Rally

The Japanese Yen experienced a sudden surge after falling below the 160.00 psychological mark against the US Dollar, but hawkish expectations from the Bank of Japan may not be enough to sustain this rally.

Market participants are pricing in a 25-basis-point rate hike for the September 17-18 BoJ policy meeting and a potential follow-up move in December.

However, analysts warn that structural forces such as Japan's massive debt pile and the wide interest rate gap will limit any further Yen appreciation.