The yen rose in September, driven by expectations that the Bank of Japan will accelerate the pace of rate hikes and comments by the U.S. Treasury secretary. Market participants increasingly believe that the unwinding of yen carry trades, in which investors borrow low-yielding yen to invest in higher-yielding assets, has accelerated the yen's appreciation.
In the foreign exchange market, the yen rose in September, with the dollar, which was in the low ¥160s on a daily basis on the 2nd, reaching around ¥154 at one point on the 7th. Against a backdrop of growing expectations that the Bank of Japan will accelerate the pace of rate hikes, market participants said that speculators were reducing yen carry trades, in which they borrow low-yielding yen to invest in assets in higher-yielding countries.
Market attention focused on the fact that U.S. Treasury Secretary Bessent repeatedly called on the Bank of Japan to raise interest rates early from late August onward. At a meeting with the Bank of Japan governor on 30 August, he expressed strong support for Japan taking decisive action on markets and monetary policy, which some said supported the yen.
Another factor cited behind the yen's appreciation was the suggestion by Bank of Japan Policy Board member Takata Hajime (高田創) at a press conference in late August that, although the pace of rate hikes had been twice a year through 2025, the situation could change and a new regime could begin in 2026. Views spread that the yen rose sharply in response to those comments.
Some market participants said that the move to reduce yen carry trades had given momentum to the yen's appreciation. Domestic bank officials said that unwinding had been progressing since around the previous week, and suggested that speculators' efforts to avoid losses were supporting the yen's rise.