The yen exchange rate surged temporarily to the low ¥158s per dollar. Expectations of additional BOJ rate hikes and the impact of interest-rate movements are spreading against the backdrop of a meeting between senior Japanese and U.S. officials.
The yen moved sharply in the foreign exchange market, strengthening against the dollar to the low ¥158s per dollar. This represented a rapid move of more than ¥1 from the recent level in the low ¥160s.
Expectations of additional rate hikes have strengthened in the market against the backdrop of dialogue between the Japanese and U.S. financial authorities and the BOJ. The face-to-face exchange between BOJ Governor Kazuo Ueda (植田和男) and Treasury Secretary Scott Bessent on the sidelines of the G20 Finance Ministers and Central Bank Governors Meeting was highlighted.
The U.S. Treasury said it viewed the yen as substantially undervalued and announced that it strongly supported Japan's intervention and policy measures to correct the yen's weakness. This prompted market speculation that the BOJ could accelerate the pace of rate hikes at its next meeting.
Long-term interest rates fell to the high 2.9% range after hovering around the 3% threshold, as the yen's strength and interest-rate movements influenced each other. Going forward, market attention is expected to focus on the direction of interest-rate differentials, depending on U.S. economic data and comments from senior officials.