Yen Soars as BOJ Rate Hike Bets Intensify on Japanese Economic Data

The yen has extended its rally, hitting a fresh seven-month high as investors bet on an imminent interest rate hike by the Bank of Japan. The currency pair USD/JPY dropped 0.8% to 153.18 yen at 02:50 GMT, after falling to a low of 152.87 earlier in the day.

The recent upward revision to Japan's second-quarter economic growth and a 2.4% rise in real wages in July have reinforced expectations that the central bank could accelerate monetary tightening. The economy grew at an annualized 1.4% in April-June, up from an initial 1.1% estimate.

Markets now price a near-fully expected 25-basis-point increase to 1.25%. Prime Minister Sanae Takaichi's economic adviser Takuji Aida also forecasts a September hike and further increases thereafter.