USD/JPY Expected to Rise Despite BoJ Rate Hike

Standard Chartered analysts Chong Hoon Park and Nicholas Chia expect Japan's central bank, the Bank of Japan (BoJ), to increase its policy rate by 25 basis points in September. The anticipated move would be a pre-emptive hike, followed by a more patient phase of policy normalization.

The BoJ is likely to raise the interest rate from its current level of 1% to 1.25%. This change is expected to avoid an overly hawkish message, signaling a cautious approach to monetary tightening.

Despite the potential rate hike, Standard Chartered does not foresee a significant decline in the US dollar against the Japanese yen (USD/JPY). The analysts believe that USD/JPY will return to its upper half of the 155-160 range by Q4, as recent positives for the yen are already priced into the market.