Yen Soars to Seven-Month High Amid BOJ Rate Hike Expectations

The Japanese yen has surged past the key 155-per-dollar threshold to a seven-month high, driven by expectations of a Bank of Japan rate hike and the unwinding of yen carry trades.

The yen's strength is also fueled by growing market expectations that the BOJ will normalize monetary policy, with markets pricing in a 0.25-percentage-point rate hike at the BOJ's September 18 monetary policy meeting.

The rally has accelerated further as options dealers sold dollars and bought back yen to limit losses, and analysts say market momentum is shifting as not only hedge funds but also medium- and long-term investors reduce their short yen positions.