Yen Soars Ahead of BOJ Meeting Amid Hawkish Rate Hike Bets

The Japanese yen has strengthened against the US dollar on Friday and is on track for its strongest week in over a month. Traders have increased bets on a Bank of Japan interest rate hike, which is driving up the value of the yen.

The yen rose to as high as 155.25 per dollar in morning trade, just shy of its July 2024 peak after a rare joint intervention between Japan and the US. It later eased but remained steady at 155.71.

Analysts say the sudden jump in the yen reflects expectations that the Bank of Japan may be more hawkish than previously thought when it meets on September 17-18 to discuss interest rates.

State Street Investment Management's Masahiko Loo said, 'This feels less like a short squeeze and more like the market cautiously reassessing a more hawkish BOJ path.'

The dollar index, which tracks the greenback against a basket of currencies including the yen and the euro, was flat at 99.01.