BOJ Rate Hike Fails to Boost Yen as Interest-Rate Gap Widens

The Japanese yen is expected to remain weak despite the Bank of Japan's (BOJ) recent rate hike, according to analysts.

Despite the BOJ raising its policy rate by 25 basis points to 1.25% on September 18, the widest gap between US and Japanese interest rates continues to draw investors away from the yen.

This has caused the yen to weaken amid a wide US-Japan rate gap, but it has recently rebounded due to expectations of tighter Japanese monetary policy and lower US rates.

Josh Gilbert, lead analyst for Asia-Pacific and the Middle East at eToro, said that a more sustained recovery in the yen would likely require faster rate hikes in Japan or a narrowing of the interest-rate gap with the US.