BOJ Shift Sparks USD/JPY Rout to 5-Month Lows
The USD/JPY pair plummeted to its lowest level since August 3, dropping 2.07% in a single trading day. The dollar traded at 155.40 against the yen, extending a decline for a second consecutive session.
The driver behind this move is not the Federal Reserve, but rather the Bank of Japan's changing stance on interest rates. Two Bank of Japan officials, Governor Kazuo Ueda and Board Member Hajime Takata, have expressed their willingness to consider rate hikes at every policy meeting, including the September 17-18 gathering.
Takata stated that a 25-basis-point hike is not set in stone and that back-to-back increases remain possible. He argued that rates should rise nimbly in response to inflationary pressures rather than following a predictable semiannual schedule.
Ueda emphasized the importance of paying attention to upside price risks, including those from the Middle East conflict, robust AI-related demand, and the boost to inflation from a weak yen. His comments carry significant weight as he made them before the blackout period ahead of the September meeting.