FX.co ★ Yen Weakens Despite Hawkish BOJ Signals

The Japanese yen was trading close to 157 per dollar on Wednesday, following a notable three-day decrease. This occurred despite Bank of Japan Governor Kazuo Ueda's remarks suggesting that the central bank is nearing its inflation target, which hints at a potential rate hike in the near future. The markets are anticipating a possible interest rate increase from the BOJ next week, with a keen eye on Ueda’s post-meeting commentary for insights into next year’s policy direction. The yen also faced downward pressure due to mounting concerns about Japan’s fiscal stability, linked to expansive spending plans proposed by Prime Minister Sanae Takaichi. Moreover, the significant interest rate differentials between Japan and other major economies have fueled bearish speculations, as Japan's domestic rates remain among the lowest globally. Consequently, the yen weakened broadly, reaching unprecedented lows against the euro.