The dollar-yen rate was trading in the low ¥153s as of 3 p.m. As markets assessed U.S. and Japanese monetary policy, some of the yen's weakening momentum was reversed, briefly sending the rate into the ¥152s. It later rebounded to the upper ¥153s.
The dollar-yen rate was trading in the ¥153.32-¥153.33 range as of 3 p.m., about ¥2 lower for the dollar and higher for the yen than at 9 a.m. The pair had also moved toward a weaker dollar and stronger yen compared with 5 p.m. the previous day in the Tokyo market. Against a backdrop of expectations of an accelerated pace of BOJ rate hikes and intentions by U.S. and Japanese authorities to correct the yen's weakness, accumulated long-dollar/short-yen positions were unwound.
The dollar fell as low as ¥152.89, its lowest level since 17 February, before the decline stalled and it returned to the low ¥153s. The pace of the decline has temporarily eased as markets seek to assess U.S. and Japanese monetary policy. The prevailing view in the market is that the correction of the yen's weakening trend will continue, while attention is also focused on the debate over BOJ rate hikes.
While the dollar-yen rate is seen as undervalued alongside the stabilization in interest rates, market participants are increasingly taking a wait-and-see stance ahead of this week's U.S. consumer price index (CPI) and next week's monetary policy meetings involving the U.S. and Japanese central banks. There is also speculation that the market's interest-rate outlook could shift in response to the scheduled attendance of a BOJ Policy Board member and remarks by Takata.