Yen Surges to Strongest Week in Over a Month

The Japanese yen strengthened to 155.25 against the U.S. dollar on Friday but retreated to 156.45, down 0.4%. Despite this fluctuation, the yen is heading for a 2.2% rise this week, its strongest weekly gain since late July.

This surge in the yen largely reflects bets that the Bank of Japan could be more hawkish than expected when it meets on September 17 to 18.

Analysts point out that the sudden jump in the yen is driven by market expectations for a Bank of Japan interest rate hike, rather than official action. The BOJ's top currency diplomat Atsushi Mimura said he remains alert to exchange-rate moves and keeps markets on high alert for potential intervention.

Experts caution that unless there are significant policy surprises or more aggressive intervention by the U.S. Fed in support of the yen, a sustained move below 155 is unlikely in the coming weeks.