Yen Sinks on BOJ Rate Hike Underwhelming Market Expectations

The Japanese yen sank to a two-week low against the dollar on September 18 after the Bank of Japan raised interest rates as expected, but failed to provide hawkish guidance.

Two policy makers at the BOJ dissented from the decision to raise rates to their highest level in 31 years, which was set at 1.25%.

This move disappointed traders who were expecting a more aggressive stance from the central bank.

The US dollar rose 1.2% against the yen to a two-week high of 157.84 yen, and was set for its biggest daily increase versus the yen since December and the largest weekly rally since September 2024.