The market reacted to remarks by the FRB chair, sending the yen lower and the dollar into the ¥160 range. Attention will now focus on possible coordinated intervention by Japan and the United States and the BOJ's next moves.
At the Jackson Hole Economic Policy Symposium, FRB Chair Warsh drew market attention by saying that he would not rule out a rate hike unless he could be confident that inflation was heading toward the target.
The remarks strengthened expectations of an early rate hike, sending the yen lower. The dollar reached the ¥160 range for the first time in about a month since late July, when Japan and the United States carried out coordinated intervention.
The weaker yen and surge in crude oil prices have raised concerns about upward pressure on prices in Japan. Some market participants now believe that the BOJ could decide to raise rates in mid-September.
A meeting of finance authorities and central bank governors from various countries is expected to be held on Monday, with Finance Minister Katayama (片山) and BOJ Governor Ueda (植田) attending on behalf of Japan. The participants are expected to exchange views on the yen's exchange rate and interest rate trends.