Japanese Yen Surges to Six-Month High on Hawkish BoJ Bets

The Japanese Yen has hit a six-and-a-half-month high against the US Dollar as investors bet on a hawkish monetary policy from the Bank of Japan (BoJ). The USD/JPY pair dropped to its lowest level since February, trading around 154.42 and down over 1% on the day.

Expectations of a BoJ rate hike at their September meeting have supported the Yen, along with capital repatriation and the unwinding of carry trades funded by Japanese investors.

Strategists at OCBC remain bullish on the JPY in the near term but caution that further gains will depend on whether expectations shift towards faster subsequent normalization and if recent chatter about repatriation translates into visible flows.