Yen Tumbles to New Low as Dollar Strengthens Ahead of Fed Rate Hike
The Japanese yen extended its decline for a third consecutive session on Wednesday, dipping below 155 per dollar as the US dollar strengthened ahead of an expected interest rate hike by the Federal Reserve.
Rising oil prices also contributed to the yen's weakening, increasing import costs for Japan's oil-dependent economy. However, the Japanese currency remains supported by expectations of more aggressive policy tightening by the Bank of Japan and recent joint interventions with Washington.
Markets currently price in an 80% chance of a BOJ rate hike on Friday, with another increase expected by the end of January. Strong demand for AI-related chips has also driven Japanese exports to rise more than anticipated in August, despite ongoing supply disruptions from the Middle East conflict.