Japanese yen dips past 159 per dollar as dollar firms

The Japanese yen weakened past 159 per dollar on Tuesday, extending its recent decline as the dollar gained modestly on safe-haven demand, with a US plan to cut Iran off from the global financial system highlighting the greenback’s central role in international trade.

However, renewed concerns over a potential US debt crisis limited the dollar’s gains amid skepticism about the effectiveness of the US Treasury Department’s expanded debt buyback plan.

Domestically, former Bank of Japan board member Seiji Adachi said the central bank will likely raise rates next month and again as early as January, warning that holding rates could reignite a yen selloff and accelerate import-driven inflation.

Markets are currently pricing in around an 80% probability that the BOJ will raise rates by 25 basis points to 1.25% next month, up sharply from about 23% before the central bank’s July meeting.