Yen Hits Seven-Month High Amid BOJ Rate Hike Bets
The yen has strengthened significantly, reaching a fresh seven-month high as investors increasingly bet on a Bank of Japan interest rate hike later this month. The currency's pair with the US dollar dropped 0.8% to 153.18 yen by 02:50 GMT, after hitting its lowest level since February 18.
The upward revision to Japan's second-quarter economic growth and a 2.4% rise in real wages in July have reinforced expectations that the central bank could accelerate monetary tightening. Markets are now pricing a near-fully expected 25-basis-point increase to 1.25%, with Prime Minister Sanae Takaichi's economic adviser Takuji Aida also forecasting a September hike.
Japanese Finance Minister Satsuki Katayama said Tokyo would seek to maintain orderly foreign exchange markets, aligning with the US on currency policy and maintaining close communication to ensure orderly foreign exchange movements. The yen's advance has also been supported by expectations of Japanese investors repatriating overseas funds and an unwinding of carry trades.
The dollar remained under pressure ahead of U.S. consumer price data due later this week, with oil prices above $97 a barrel after Iran threatened retaliation against US energy interests in the Gulf.