FX.co ★ Yen Strengthens on Hawkish BOJ Signals

The Japanese yen strengthened toward 158 per dollar on Monday, retracing part of last week’s losses after hawkish remarks from Bank of Japan officials bolstered expectations for further interest rate hikes. BOJ Chief Economist Seisaku Kameda signaled that the central bank is likely to raise rates in December and continue tightening monetary policy next year, potentially pushing borrowing costs closer to 2%. BOJ Governor Kazuo Ueda added that underlying inflation is expected to remain near the bank’s 2% target, while cautioning that there are “some upside risks.”

At the same time, Finance Ministry data confirmed that Japanese authorities intervened in the foreign exchange market in late July to support the yen, purchasing a record ¥15.4 trillion over three days. Japan and the United States had previously acknowledged coordinated intervention on July 31, marking their first joint effort in the currency market to shore up the yen since 1998.