Yen Falls as BOJ Keeps Rates Unchanged Amid Speculative Pressure

The Japanese yen has continued to struggle after the Bank of Japan (BOJ) left interest rates unchanged, despite market expectations for a hike. The dollar extended its gains against the yen, trading up 0.81% at 160.760 yen.

This follows a coordinated intervention by Japan and South Korea in the New York session overnight to prop up the fragile currency. Speculators have amassed large bearish bets on the yen, with net short positions worth $11.65 billion, near the highest in two years.

BOJ Governor's comments that the bank would continue to raise interest rates in response to economic and financial developments has been met with skepticism by some analysts. Nick Twidale, chief market strategist at ATFX Global, questioned whether a surprise hike from the BOJ could be possible given their previous slow pace of rate hikes.

Chris Weston, head of research at Pepperstone, noted that coordination between Japan and South Korea will make speculators think twice about holding bearish positions on the yen. The won rose to a nine-month high before paring some gains against the dollar.