Yen Soars as BoJ Rate Hike Speculation Reaches Fever Pitch

The Japanese yen has surged by over 1.7% against the US dollar due to speculation that the Bank of Japan (BoJ) will raise interest rates.

This move, which lifted the yen to its highest level against the dollar in a month at 155.85, follows a 0.9% increase the previous day.

Investors have been reassessing their expectations for future interest rate paths, not only in Japan but also across other major economies, amid fears of fresh inflation increases due to higher oil prices.

Citi noted that remarks by BoJ policymaker Hajime Takata suggesting the need to move more 'nimbly' have heightened prospects for a decisive rate hike.

Markets now believe there's a 77% chance of a rate rise at the BoJ's next meeting, which starts on September 17.