Yen Surge Sparks Intervention Fears Ahead of BOJ Meeting
Asian currencies firmed up against the dollar on Thursday as the Japanese yen surged towards 158 per dollar, prompting concerns of possible intervention ahead of the Bank of Japan's policy meeting next month.
The yen's rally was led by BOJ board member Hajime Takata's statement that a 25-basis-point hike was not set in stone and back-to-back increases were still possible. This fueled speculation of a larger rate increase for September 18, with markets now assigning a small probability to a 50-basis-point hike.
Japanese Finance Minister Satsuki Katayama and U.S. Treasury Secretary Scott Bessent have warned that they are prepared to intervene again without hesitation if necessary. The timing of the BOJ meeting is also crucial, as investors are watching the three-day break following the September 18 decision when thinner trading could make any intervention more effective.
The dollar slipped against major currencies due to renewed U.S.-Iran tensions and higher oil prices, which added to concerns over sticky inflation and higher interest rates. Hawkish Fed comments have also put pressure on global bonds.