BOJ Hike Widens Yen Weakening Amid Renewed Inflation Fears

The Bank of Japan (BOJ) hiked interest rates by 25 basis points on Friday, September 18, to 1.25%, marking a new high in 31 years amid renewed inflation concerns.

The yen slumped more than 1% against the Singapore dollar and about 1% against the US dollar after the rate hike announcement.

According to Masahiko Loo, Senior Fixed Income Strategist at State Street Investment Management, 'The initial yen weakness reflects two dissents and the fact that this was a meeting without an updated Outlook Report, limiting the BOJ's ability to reinforce a hawkish message through revised forecasts.'

The US Federal Reserve had also hiked rates earlier in the week, widening the U.S.-Japan rate gap and putting renewed pressure on the yen.