Yen Rallies on BOJ Hawkishness Despite Dollar Gains

The Japanese yen has continued its recovery in Asian trading on Friday, extending gains against major and minor currencies. Despite falling for a second consecutive day against the US dollar, the yen remains on track for a second consecutive weekly gain.

This move is attributed to the Bank of Japan's hawkish stance as it prepares to raise interest rates next week, most likely by 25 basis points. The central bank has signaled that it will continue normalizing monetary policy this year and raise interest rates more than once during the remainder of 2026.

The US dollar continues to recover in the foreign exchange market, driven by strong economic data and expectations of further interest rate hikes. The yield on the 10-year US Treasury note has climbed to a three-year high of 4.979%, boosting the attractiveness of investments in the US dollar.