Yen Surges Past 159 Amid BOJ Hawkish Signals

The yen surged past 159 against the dollar on Wednesday after hawkish commentary from a Bank of Japan board member fueled speculation about rate hikes. BOJ policy board member Hajime Takata said raising rates twice a year was 'conventional thinking', suggesting the central bank could hike more frequently to counter strengthening inflationary pressures.

Chris Scicluna, head of economic research at Daiwa Capital Markets Europe, noted that the move was significant and timed conveniently for a rate check by either the US or Japan. However, he cautioned that identifying the exact driver of the dollar-yen move is difficult.

The yen had touched a 40-year low of 163.98 per dollar before a rare joint US-Japan intervention at the end of July, and then strengthened to 155.21 before giving back roughly half of those gains. BOJ Governor Kazuo Ueda added to the hawkish tone by saying that consecutive rate hikes could be a possibility.

Analysts noted that while some factors supported the possibility of intervention, the scale of Wednesday's move was relatively limited. The dollar index rose 0.20% to 99.865, its highest level since August 17, while the euro slipped 0.16% to $1.1575 after touching $1.1566, its weakest since August 20.