The Japanese yen strengthened to 152.89 per dollar on Tuesday, from around 160 less than a week earlier and to its strongest level since February, accelerating the unwinding of leveraged carry trades. The move pressured Japanese equities, with the Nikkei Stock Average falling 1,130.51 yen, or 1.70%, to 65,269.33 and the TOPIX dropping 75.47 points, or 1.83%, to 4,050.33 on September 8. Exporters and semiconductor stocks led selling as the stronger yen reduced the value of overseas earnings and investors took profits after the Nikkei's recent advances. Markets broadly expected the Bank of Japan to raise its policy rate by 25 basis points to 1.25% at its September 17-18 meeting. People familiar with the BOJ's thinking said officials were considering whether a 50-basis-point increase could be warranted, but had little appetite for an unusually large move because near-term price pressures remained contained. The central bank was also considering raising rates roughly once a quarter. July wages grew at their fastest pace since 1997, second-quarter GDP was revised higher and Middle East-related oil-price pressures kept inflation risks in focus. Cross-border yen borrowing, a carry-trade proxy, reached a record 360 trillion yen, or $2.35 trillion, in March, while JPMorgan estimated that 16 trillion to 17 trillion yen of bearish yen positions remained outstanding on September 3.