The yen rose against the dollar in the Tokyo foreign exchange market on the 3rd, briefly reaching the ¥156 range. The move reflected changes in the US-Japan interest-rate differential and expectations of an additional BOJ rate hike.
The yen rose against the dollar in the Tokyo foreign exchange market on the 3rd, briefly reaching ¥156.36 per dollar. This was the yen's strongest level since early August, representing a gain of more than ¥3 from its level at 5 p.m. the previous day.
Expectations for an additional BOJ rate hike strengthened, while expectations for a US rate hike receded, prompting yen buying and dollar selling as the market focused on a narrowing US-Japan interest-rate differential. Reports that US Treasury Secretary Bessent was critical of the Takaichi administration's fiscal policy also contributed to the yen's move.
As of 5 p.m., the dollar was trading in a range of ¥157.03–¥157.06, while the euro was at ¥182.22–¥182.26. BOJ Policy Board member Takata Hajime (高田創) delivered a speech in Sapporo, and reports suggested that he had left open the possibility of an acceleration in the pace of rate hikes and an increase in the size of the hikes.
Some market participants are said to be pricing in a 0.5% rate hike ahead of time, while securities strategists say the likelihood of a substantial rate hike is low. The yen's upward trend is expected to run its course sooner or later.