BOJ Hike Bets Send Yen Soaring to 156
The Japanese yen has continued its rally, trading around 156 per dollar on Monday after gaining more than 2% last week. This strength is attributed to growing expectations that the Bank of Japan will raise interest rates this month.
Takuji Aida, an economic adviser to Prime Minister Sanae Takaichi, believes that the central bank is likely to hike rates in September and deliver another increase by January next year.
The comments suggest a shift within the Takaichi administration, which has previously taken a dovish stance, acknowledging the need for additional BOJ hikes to stem excessive yen weakness.
The currency also benefited from the unwinding of carry trades, expectations for capital repatriation and increasing political pressure from the US.