Dollar-Yen Falls Below 158 as BOJ Rate Hike Bets Accelerate

The Japanese yen strengthened against the US dollar in Tokyo foreign exchange trading on the 3rd, with the dollar-yen pair falling as low as 157.54 yen at one point. This is the lowest level since August 10, when it was also in the 157 range.

The shift in expectations surrounding Bank of Japan monetary policy is behind this move. After board member Hajime Takata hinted at a faster pace of rate hikes in a speech in Sapporo on the 2nd, market participants increasingly priced in the possibility of a hike exceeding 25 basis points at the next policy meeting.

The yen-buying momentum continued into the afternoon, with dollar-yen standing at 158.02 yen by 12:00, roughly 69 sen weaker for the dollar compared to the New York close of 158.71 yen.