Yen Stabilizes as BOJ Hike Bets Intensify
The yen stabilized near the 160-per-dollar level on Tuesday after U.S. Treasury Secretary Scott Bessent hinted at a potential interest rate hike from the Bank of Japan later this month.
Bessent's comments, made during a Group of 20 finance leaders' gathering, suggested that he believes the Japanese government and central bank will take action to strengthen the yen, which has been under pressure due to rising oil prices and strong Treasury yields.
The BOJ is already pricing in a 73% chance of a rate hike later this month, but analysts warn that a single increase may not be enough to sustainably move the yen away from its current level. A more hawkish path by the central bank would be needed to achieve this goal, according to Charu Chanana, chief investment strategist at Saxo.
The U.S. dollar was subdued on Tuesday, backing away from Friday's gains as investors contended with rising odds of a hike from the Federal Reserve in September. The euro and sterling were also steady, while the Australian and New Zealand dollars firmed slightly.