BOJ Rate Hike Fails to Boost Yen as Market Awaits Further Normalization

The Japanese yen sank to its weakest level in two weeks against major peers on Friday, following a widely-expected rate hike by the Bank of Japan (BOJ). The BOJ lifted interest rates to their highest level in over three decades, but this move failed to halt the currency's decline. Against the US dollar, the yen weakened as much as 0.8% to 157.145 yen per dollar, its weakest since September 3.

Market analysts were disappointed with the BOJ's decision, which was not unanimous, with two board members voting to keep policy unchanged. 'They've just clearly underwhelmed versus expectations here,' said Ray Attrill, head of FX strategy at National Australia Bank in Sydney.

The yen's softness followed data on Friday that showed Japan's core inflation held steady near the central bank's target of 2% in August, highlighting mounting price pressures. Attention now turns to Governor Kazuo Ueda's press conference, where he will explain the central bank's decision and confirm whether further normalization remains firmly on the table.