Dollar-Yen Volatility Peaks as BOJ Speculation Meets Geopolitical Risks
The dollar-yen pair experienced choppy trading on September 9 in Tokyo foreign exchange markets. The pair's price oscillated between 153.25 yen and 153.98 yen, with no clear direction due to conflicting market forces.
Persistent yen-buying pressure driven by speculation about an accelerated Bank of Japan (BOJ) rate-hike pace was countered by dollar buying tied to rising crude oil prices amid escalating Middle East tensions and higher U.S. long-term interest rates.
U.S. Treasury Secretary Bessent's remarks suggesting a review of reflationary policies shook confidence in the Takamasa administration's fiscal expansion and low-interest-rate policies, which had served as a 'psychological anchor' for market participants engaged in yen carry trades.
Akira Moroga, Chief Market Strategist at Aozora Bank, noted that the unwinding of yen carry positions was accelerating after market participants built excessively large positions amid a strong sense of security. He maintained his year-end forecast of 155 yen.