Yen Surges to Strongest Level in Over a Month Amid BOJ Hike Bets

The Japanese yen has strengthened to its highest level in over a month against the US dollar, driven by bets on an interest rate hike from the Bank of Japan. The yen is now up 2.5% for the week, its largest weekly gain since late July when Japan and the US conducted a joint intervention to halt the yen's slide.

Analysts say the sudden jump in the yen reflects expectations that the BOJ may be more hawkish than previously thought when it meets on September 17-18. 'This feels less like a short squeeze and more like the market cautiously reassessing a more hawkish BOJ path,' said Masahiko Loo, senior fixed income strategist at State Street Investment Management in Tokyo.

Meanwhile, Japan's top currency diplomat Atsushi Mimura has expressed caution, saying he remains alert to exchange-rate moves and is in constant contact with US authorities. This has kept markets on edge for the possibility of another yen-buying intervention.