Dollar Strengthens as BOJ Rate Hike Fails to Impress

The US dollar strengthened against the yen on September 18th after two policymakers at the Bank of Japan (BOJ) dissented from a widely expected decision to raise interest rates.

This move raised doubts among traders about the likelihood of further hikes, leading to a weakening of the Japanese currency. The BOJ pushed rates to their highest level in 31 years at 1.25 per cent, but without explicitly hawkish guidance, traders felt it was insufficient.

Steven Englander, head of G10 FX research at Standard Chartered, noted that 'the lack of hiking punch makes it easier for the US dollar to go higher.' He added, 'The US dollar strength that we have been forecasting for the medium to long term may finally be here.'

The greenback rose 0.5 per cent against the yen to 156.725 yen and was set for its largest weekly rally since October 2025.