Yen Surges as BOJ Rate Hike Bets Intensify

The Japanese yen surged by more than 2% against the US dollar on Thursday, fueled by expectations of a larger-than-expected interest rate hike by the Bank of Japan. Analysts point to BOJ data showing no official intervention behind the currency's strong gains on Wednesday.

BOJ board member Hajime Takata's hawkish comments were cited as a factor behind yen strength, with markets pricing in 75% odds of a 25-basis-point rate hike this month. Some traders speculate an even larger increase is possible.

While the yen has struggled to find fundamental support due to still-wide interest rate differentials and fiscal worries, its sharp rise against the dollar on Thursday suggests market bets are shifting in favor of a BOJ rate hike. The Japanese currency is approaching the 155.21 level that was the yen high after the July intervention.