Yen Soars as Hawkish BoJ Bets Fuel Dollar Decline

The Japanese Yen has reached a six-and-a-half-month high against the US Dollar, driven by expectations of a hawkish Bank of Japan (BoJ) policy. The USD/JPY pair has dropped over 1% to around 154.42, its lowest level since February.

Market strategists at OCBC remain cautiously optimistic on the JPY in the near term but warn that further gains will depend on whether expectations shift towards a faster subsequent pace of normalization and if repatriation chatter translates into more visible flows.

The BoJ is widely expected to raise interest rates by 25 basis points to 1.25% at its September 17-18 meeting, with some speculating that it could tighten policy even further amid persistent inflation concerns.