Yen Rises as BoJ Meeting Looms, Dollar Index Fades

The Japanese yen has begun to recover against a basket of major and minor currencies in Asian trading on Thursday, rising from its two-week low against the US dollar. The Bank of Japan's monetary policy meeting is underway, with a decision due on Friday that is expected to raise interest rates by 25 basis points to 1.25%, marking its second increase this year.

The yen rose against the dollar as buying emerged at lower levels alongside a pullback in the US currency and a halt in the rise of the 10-year US Treasury yield. The US Dollar Index fell 0.1% on Thursday, retreating from a seven-week high of 100.37 points.

The Bank of Japan is widely expected to raise interest rates by around 25 basis points to 1.25%, the highest level since 1995, marking its second rate increase this year. According to Reuters sources, four people familiar with the central bank's thinking said it is preparing to raise interest rates this week and could signal a faster pace of monetary tightening in the future if price pressures increase the risk of inflation overshooting its target.