FX.co ★ Yen Remains Volatile as Ueda Reaffirms Tightening Path

The Japanese yen weakened beyond 157 per dollar on Friday, falling to a two-week low after the Bank of Japan delivered a widely expected interest rate hike, with two policymakers dissenting. The currency later trimmed losses after Governor Kazuo Ueda emphasized at the post-meeting press conference that the BOJ remains committed to further rate increases and will calibrate the degree of monetary accommodation in line with developments in economic activity, prices and financial conditions.

The central bank raised its policy rate by 25 basis points to 1.25%, the highest level since April 1995, as it grapples with persistent inflation and disruptions linked to tensions in the Middle East. The decision drew opposition from board members Toichiro Asada and Ayano Sato, underscoring internal resistance to a faster tightening cycle. The yen also came under pressure from expectations that Japan’s rate hikes will lag behind the Federal Reserve’s pace, following the US central bank’s hawkish move earlier this week.