BOJ Rate Hike Seen as Key to Yen Stability

The yen's prolonged slide has global investors on edge, with many wondering if government intervention will stabilize the currency. Rick Rieder, who oversees global fixed income at BlackRock, says Japan's central bank is key to yen stability.

Rieder notes that propping up a currency with one-time purchases is like bailing out a boat with a bucket that has a hole in it - you can keep scooping, but the water keeps coming back. He believes that the Bank of Japan (BOJ) needs to raise interest rates to attract investors and stabilize the yen.

The current interest rate gap between Japan's benchmark rate of 1% and the US Federal Reserve's target range of 3.5% to 3.75% is a major issue. Rieder predicts another increase in September, although he admits the BOJ might delay that decision until December.