BOJ Rate Hike Fails to Lift Yen Amid Fed Tightening

The Bank of Japan's (BOJ) decision to raise its benchmark interest rate to 1.25% on September 18 has failed to strengthen the yen, despite expectations it would do so.

In New York trading on September 17, the yen fell into the low 156s against the dollar, after previously strengthening into the 152s on similar expectations.

The reversal is attributed to the Federal Reserve's decision to raise interest rates for the first time in three years and two months, signaling it could tighten further and keeping the U.S.-Japan rate gap wide.

This has led foreign-exchange specialists in Japan to predict that the yen will weaken again by year-end, with eight out of ten expecting this outcome due to the still-wide interest-rate gap between the two countries.