Yen Slips Ahead of BOJ Decision
The Japanese yen weakened past 156 per dollar on Friday, hovering near two-week lows as investors awaited the latest Bank of Japan policy decision, with markets widely expecting an interest-rate hike. Investors will also seek guidance on the potential for further tightening as policymakers contend with rising inflation and wages, alongside pressure from US Treasury Secretary Scott Bessent for a more aggressive pace of rate increases. Meanwhile, Japan’s core inflation eased to 1.7% in August from 1.8% in July, marking its first slowdown in four months. However, expectations that price pressures could strengthen in the coming months continued to support a hawkish BOJ outlook, with disruptions stemming from the Middle East adding to inflation risks. Earlier this month, the yen climbed to seven-month highs on expectations of more aggressive BOJ tightening, recent joint interventions by Tokyo and Washington, and prospects of greater capital repatriation by Japanese investors.
The Japanese yen weakened past 156 per dollar on Friday, hovering near two-week lows as investors awaited the latest Bank of Japan policy decision, with markets widely expecting an interest-rate hike. Investors will also seek guidance on the potential for further tightening as policymakers contend with rising inflation and wages, alongside pressure from US Treasury Secretary Scott Bessent for a more aggressive pace of rate increases. 8% in July, marking its first slowdown in four months.
However, expectations that price pressures could strengthen in the coming months continued to support a hawkish BOJ outlook, with disruptions stemming from the Middle East adding to inflation risks. Earlier this month, the yen climbed to seven-month highs on expectations of more aggressive BOJ tightening, recent joint interventions by Tokyo and Washington, and prospects of greater capital repatriation by Japanese investors.