Dollar-Yen Pair Tumbles Near ¥159 on BOJ Rate Hike Expectations
The dollar-yen pair traded lower near ¥159 in Tokyo foreign exchange trading on Monday morning. Yen buying and dollar selling were prevalent due to expectations that the Bank of Japan may raise interest rates sooner than previously anticipated.
According to a foreign exchange brokerage, 'dollar selling and yen buying by domestic exporters was dominant' before the fixing rate announcement. An asset management firm noted that 'expectations for a BOJ rate hike have strengthened, prompting yen buying.' The pair briefly dipped below ¥159 but recovered to around ¥159.
A foreign exchange dealer at a domestic bank reported 'dollar surplus' conditions ahead of the mid-morning fixing settlement. Japanese exporters appeared to step up yen-buying and dollar-selling orders, which some attribute to repatriation flows related to U.S. Treasury coupon payments and sizable redemptions in mid-August.
The market is seeing a tug-of-war between yen buying driven by narrowing U.S.-Japan interest rate differentials and safe-haven dollar demand.