Yen Surges Past Seven-Month High Amid US Pressure

The Japanese yen has surged to its strongest level since February, reaching a price of 154 per dollar on Tuesday. This reversal comes after the currency hit a 40-year low in July.

The rally is driven by the unwinding of carry trades and expectations of capital repatriation, as well as growing US pressure for Japan to support the yen through tighter monetary policy.

Economic adviser to Prime Minister Sanae Takaichi said that the Bank of Japan (BOJ) is likely to raise interest rates this month, with another increase expected by January next year. This highlights a shift in the Takaichi administration's stance on monetary policy, which has previously favored a dovish approach.

The BOJ's potential rate hike comes as data shows Japanese wages rose at their fastest pace since 1997, further strengthening expectations for a more hawkish BOJ policy stance.