Yen Under Pressure as Rate Check Speculation Mounts

Currency markets are focused on the yen after its sharp drop last week, sparking speculation of a rate check from Tokyo to prop up the volatile currency. The yen was trading at 156.64 per US dollar, firmer by a touch but still down 2% from last week's close.

The Bank of Japan raised interest rates on Friday to their highest level in 31 years to 1.25%, but the move failed to boost the yen as two dissenting votes and a lack of explicitly hawkish guidance disappointed investors.

A rate check involves authorities asking banks for currency quotes to gauge market conditions, which traders view as a precursor to currency intervention. The BOJ's messaging has become harder because the Federal Reserve delivered a hawkish signal with its unanimous decision to raise its policy rate.