FX.co ★ Yen Holds Near 7-Month High

The Japanese yen hovered around 153.4 per dollar on Thursday, holding near its strongest level in seven months ahead of a widely anticipated Bank of Japan rate hike next week. The central bank is expected to raise its policy rate to 1.25%, the highest level in roughly 31 years, following its previous increase in June. The BOJ is seeking to mitigate the risk that inflation could overshoot expectations amid rising crude oil prices and persistent yen weakness.

The Takaichi administration has adopted a more hawkish tone, with policymakers acknowledging the need to rein in excessive yen depreciation. At the same time, US Treasury Secretary Scott Bessent warned traders earlier this week against betting on further yen weakness, noting that he has “pretty good insight” into the BOJ’s moves when deciding whether to intervene in the currency market. The yen has also drawn support from the unwinding of carry trades and growing expectations of increased capital repatriation.