BOJ Rate Hike Bets Send Yen Soaring to One-Month High
The USD/JPY pair has fallen to its lowest level in about a month, below ¥157.00, after Japan's currency strengthened from above ¥160 to around ¥157 in two sessions.
This sudden reversal is being attributed to changing rate expectations, with analysts increasingly pointing to hawkish Bank of Japan signals rather than government dollar sales or intervention.
BOJ board member Hajime Takata said interest rates should rise nimbly in response to inflation, while Governor Kazuo Ueda mentioned that economic and price risks would be discussed at September's meeting, leaving every policy gathering potentially live.
This has led markets to almost fully price a BOJ increase this month, with around 50 basis points of tightening expected by year-end, causing Japan's two-year government yield to climb to its highest since 1995.