Yen Tumbles Ahead of BOJ Rate Hike Expectations

The Japanese yen has slipped to two-week lows as investors await the Bank of Japan's latest policy decision, expected to bring an interest-rate hike.

Market expectations are for a more aggressive pace of rate increases to combat rising inflation and wages, as well as pressure from US Treasury Secretary Scott Bessent.

Inflation in Japan eased slightly in August, with core inflation falling to 1.7% from 1.8% in July, but concerns about potential future price pressures are still driving a hawkish BOJ outlook.

The yen has been under pressure due to a combination of factors, including expectations of more aggressive BOJ tightening, joint interventions by Tokyo and Washington, and prospects of greater capital repatriation by Japanese investors.