Yen Soars as BOJ Hike Bets Rise, Dollar Weakens on Waller Comments

The Japanese yen surged more than 2% against the US dollar on Thursday as investors increased their bets on a Bank of Japan interest rate hike. The sharp move was fueled by hawkish comments from BOJ board member Hajime Takata, who suggested that the central bank should conduct interest rate hikes nimbly to counter intensifying inflationary pressures.

Market pricing is now indicating a 75% probability of a 25-basis-point BOJ hike this month, with some traders speculating about an even larger increase. An additional hike in October is also seen as a possibility, though not a likely one.

The dollar added to losses after Federal Reserve Governor Christopher Waller said he would argue for keeping interest rates steady at the next policy meeting if upcoming data confirms that inflation pressures are cooling off.