BoJ Hike Bets Rise as Yen Stalls Near 159

The USD/JPY exchange rate has been steadily increasing over the past few weeks, reaching as high as 159.98 by Friday's close.

Natixis and MUFG economists are now predicting a 25-basis-point hike in interest rates from the Bank of Japan (BoJ) in September, with Natixis bringing forward its previous October call to coincide with this expected increase.

This move is seen as necessary due to the strengthening inflation pressure in Japan, with nationwide headline inflation rising to 1.9% year-on-year in July and manufactured-goods inflation accelerating to 3.2%.

The Japanese government's decision to participate in the Yen intervention has also been cited as a factor contributing to the BoJ's willingness to tighten monetary policy.