The yen rose around 2% against the dollar, breaking through the ¥154 level. Market participants cited expectations of a Bank of Japan rate hike and the unwinding of speculative positions as factors behind the sharp intraday rise.
The yen moved sharply against the dollar on the 7th, rising by around ¥2 at one point to reach the low ¥154 range. It hit its highest level in six months, dating back to late February, with the intraday rise attributed to growing expectations that the Bank of Japan would accelerate its rate hikes and the unwinding of speculative short-yen, long-dollar positions.
Market participants are increasingly expecting the Bank of Japan to accelerate the pace of rate hikes, and attention is focused on whether a unanimous rate hike will be delivered at the 18 September monetary policy meeting. A key focus will also be whether Governor Ueda Kazuo (植田 和男) maintains the possibility of an additional rate hike in October.
Factors supporting the yen included concern over intervention by Japanese and US authorities and the broadening of medium- to long-term buying pressure. The unwinding of speculative short-yen positions and a stronger yen trend in yen crosses were also observed across other currencies.
Expectations that the GPIF, Japan's Government Pension Investment Fund, will repatriate funds and purchase Japanese government bonds are seen as one factor supporting the yen. The retreat in demand for the dollar as a safe-haven asset amid stabilising conditions in the Middle East has also contributed to the yen's strength.