Yen Surges on BOJ Hike Bets and Pension Fund Activity

The yen has surged to a one-month high against the dollar due to growing expectations that the Bank of Japan will raise its policy rate. The currency reached as low as 155.3 per dollar, its strongest level in a month, before settling at around 156.2.

This move is attributed to several factors, including BOJ officials' suggestions that rate increases could be larger than expected. Hajime Takata, a BOJ policy board member, stated that there's no need to limit rate hikes to roughly once every six months or fix the size of increases at 0.25 percentage points.

Analysts also point to signs that Japan's public pension fund may increase its allocation to Japanese government bonds. Word emerged that the fund convened its board of governors on March 21, breaking with convention and raising speculation about potential bond purchases.