FX.co ★ Yen Rallies on Haven Buying, Strong Inflation

The Japanese yen strengthened toward 156 per dollar on Friday, reaching its highest level in five weeks as a global selloff in technology and artificial intelligence stocks drove investors toward safe-haven assets. The equity downturn deepened this week after Meta Platforms’ plans to boost capital expenditure reignited concerns that technology firms may take on additional debt to finance AI-related investments.

In Japan, data showed that both headline and core inflation rose 2.1% year-on-year in September, their highest readings in nine months, as yen weakness and elevated energy prices pushed up import costs. With underlying inflation now back above the Bank of Japan’s 2% target, market expectations for another interest rate hike this year have strengthened. The BOJ is widely expected to keep rates unchanged at its upcoming meeting, potentially clearing the way for a rate increase in December.