The yen briefly surged to ¥155.30 per dollar, and its sharp two-day rise has altered its gradual downtrend. With concerns about intervention mounting, the market is assessing the outlook while pricing in expectations for a Bank of Japan rate hike and a review of GPIF's asset management.
The yen briefly rose 2.15% against the dollar to ¥155.30, reversing its gradual downtrend over the past month. The effects of coordinated Japan-US intervention did not last long, and concerns about another intervention have resurfaced.
Market participants cite speculation that the Bank of Japan could accelerate its rate hikes or increase the size of its hikes, as well as speculation that GPIF could review its asset allocation, as factors supporting the yen. At the same time, they remain cautious about the prospect of a sustained, significant yen appreciation based solely on these factors.
The dollar fell broadly following comments by Federal Reserve Governor Waller, and developments in Japan and the United States are said to have supported the yen. Some observers suggest that yen buying by overseas investors and hedging demand from domestic investors may have pushed up the currency.
According to people familiar with the matter, the Bank of Japan is expected to raise its policy rate by 0.25 percentage points to 1.25% at this month's meeting. With upside risks to prices in focus, the central bank is expected to respond flexibly on the pace of rate hikes.