Yen Jumps to Seven-Month High on BOJ Rate Hike Expectations

The Japanese yen has surged to its strongest level in nearly seven months as market expectations of a Bank of Japan interest rate hike next week intensify.

The currency surpassed levels reached during Japan's July intervention and hit its strongest since February, climbing to as much as 152.89 per dollar before pulling back to trade at 154 in London morning trade.

Traders and analysts point to several factors driving the yen's upward trend, including bets on a faster pace of Bank of Japan tightening, potential repatriation of Japanese investor funds, and unwinding of carry trades.

Domestic market expectations for a BOJ rate hike have pushed investors scurrying for cover ahead of US inflation data this week, putting pressure on the dollar.