Yen Slips as Dollar, Oil Gain
The Japanese yen weakened toward 155 per dollar on Tuesday, declining for a second consecutive session as the dollar strengthened ahead of an expected US Federal Reserve interest rate hike this week. The yen also faced pressure from rising oil prices, which increase import costs for Japan’s oil-dependent economy. Still, the Japanese currency remained near seven-month highs amid expectations for more aggressive monetary tightening by the Bank of Japan, the unwinding of carry trades and signs of increased asset repatriation by domestic investors. The BOJ is widely expected to raise its policy rate to 1.25% on Friday, its highest level since April 1995, as the central bank responds to persistent upside risks to inflation. Markets are also watching for guidance from the BOJ on the potential for another rate hike later this year.
The Japanese yen weakened toward 155 per dollar on Tuesday, declining for a second consecutive session as the dollar strengthened ahead of an expected US Federal Reserve interest rate hike this week. The yen also faced pressure from rising oil prices, which increase import costs for Japan’s oil-dependent economy. Still, the Japanese currency remained near seven-month highs amid expectations for more aggressive monetary tightening by the Bank of Japan, the unwinding of carry trades and signs of increased asset repatriation by domestic investors. 25% on Friday, its highest level since April 1995, as the central bank responds to persistent upside risks to inflation.
Markets are also watching for guidance from the BOJ on the potential for another rate hike later this year.