BOJ Intervention Fails to Halt Yen Plunge Amid Inflation Risks

The Bank of Japan's intervention in the currency market has sparked a reversal in yen losses. Following a report by Nikkei that the BOJ conducted a rate check, the yen pared its declines on Friday. The move was seen as an attempt to stabilize the exchange rate after the central bank's interest rate hike earlier in the week. Economists warn that inflation risks and a weak yen could push policymakers to tighten monetary policy further.

The BOJ raised rates by 25 basis points to a 31-year high of 1.25 per cent on Friday (Sep 18). The widely expected move was seen as part of a gradual normalization of monetary policy. However, some experts caution that the rate hike may be too little, too late in addressing Japan's economic challenges.