Yen Slumps to 156.2 as Fed Rate Hike Boosts Dollar

The Japanese yen weakened against the US dollar, dropping to around 156.2 per dollar on Thursday as the dollar strengthened following the Federal Reserve's 25-basis-point rate hike on September 16.

The Fed lifted its benchmark interest rate to 3.754%, marking its first increase since 2023, while updated projections showed further tightening and higher inflation expectations through 2026.

The yen's earlier September rally, fueled by expectations of a Bank of Japan rate hike, has since reversed as the US-Japan rate differential remains pronounced.

Attention now turns to the BOJ, which is expected to raise borrowing costs on Friday, potentially narrowing the policy gap.