FX.co ★ Yen Rebounds on BOJ Rate Hike Bets

The Japanese yen strengthened toward 153 per dollar on Tuesday, recouping losses from the previous session amid growing speculation that the Bank of Japan could raise interest rates sooner than expected. Former BOJ board member Saiji Adachi said on Monday that the central bank is likely to lift its benchmark rate in April, by which time it should have gathered sufficient data to justify such a move. BOJ Governor Kazuo Ueda also noted that Prime Minister Sanae Takaichi made no specific policy requests during their regular meeting on Monday, where the two discussed economic conditions. Although there had been concerns that Takaichi might hinder the BOJ’s policy normalization efforts, she has so far avoided opposing a rate hike, especially under mounting market pressure. On Monday, however, the yen weakened after Japan’s fourth-quarter economic growth came in far below expectations, weighed down by soft domestic demand.