As the yen continues to weaken independently of the BOJ's rate hike, speculation about 'rate checks' is spreading and caution is mounting over possible intervention during the holiday period. Following the Federal Reserve's rate-hike decision and the BOJ's response, the yen could remain subject to thin-market trading, analysts say.
The Federal Reserve (FRB) unanimously decided to raise rates by 0.25%, while its interest-rate projections indicated the possibility of further hikes. As upward pressure on long-term interest rates eased, expectations grew that concerns about the Fed falling behind the curve would subside.
In Japan, the Bank of Japan raised its policy rate by 0.25% at its Monetary Policy Meeting, setting it at around 1.25%. Although 2 members voted against the move, market reaction after the press conference included a retreat in rate-hike expectations, and the yen weakened temporarily to around ¥156.90.
Market reaction to Governor Ueda's remarks was mixed. His failure to specify the timing or pace of future rate hikes led to yen selling. The yen weakened again in the afternoon, increasing expectations of actual intervention in the yen market during the holiday period.
Before and after the holiday period, speculation about 'rate checks' spread and caution intensified over possible intervention during Silver Week. Past interventions totaled approximately ¥15 trillion in July and August and approximately ¥11 trillion during Golden Week, fueling speculation that actual intervention could take place.