Yen Sprints to Seven-Month High on Faster Bank of Japan Tightening Bets

The yen surged to a seven-month high on September 7 as traders reassessed their outlook on the currency, driven by bets on faster Bank of Japan tightening and expectations that Japanese investors may move funds home.

The dollar slid 1.14% against the Japanese currency to 154.42, its lowest since February, pushing past the lows struck in August after Washington and Tokyo jointly stepped into markets to prop up the yen.

Lee Hardman, senior currency analyst at MUFG, said the break past the 155 level seemed to have reinforced traders' bullish views on the currency: 'So far this year, when we have seen the yen strengthen following bouts of intervention, that 155 level was where dollar/yen tended to bottom out. Breaking past that level is a bullish signal and we could see further upside for the yen.'

The recent moves have been dramatic; the dollar traded above 160 yen as recently as September 1.