Yen Sinks as Traders Question BOJ's Rate-Hike Pace

The yen continued its downward trend for the third consecutive day against the dollar on Tuesday, as investors debated whether the Bank of Japan would raise interest rates quickly enough to keep pace with global peers.

Last week's rate hike by the BOJ was met with caution from two policymakers who pushed for a more gradual pace, sparking concerns that additional hikes may be challenging to implement.

'Whether the central bank quickens its pace remains contingent on how events unfold,' said Naomi Fink, chief global strategist at Amova Asset Management. 'Questions of where neutral and terminal policy rates sit are still open for debate.'

The yen has slipped 0.22% to 157.70 against the dollar, with investors pricing in a 30% chance of another rate hike to 1.5% in October.