The Bank of Japan is widely expected to raise its policy rate from 1% to 1.25% on Friday, the 18th, potentially making the yen a more important driver of the South Korean won than the U.S. dollar as markets assess possible rate increases by Japan and the Federal Reserve. All 14 economists surveyed by Nikkei Shimbun expect the quarter-point Japanese increase, which would take Japan’s rate to its highest level in 31 years. The move comes as inflation has remained above the Bank of Japan’s 2% target for most of the past four years and the yen has fallen to multidecade lows, while Prime Minister Sanae Takaichi continues to support Abenomics, record fiscal spending and low borrowing costs. Former Abenomics adviser Koichi Hamada now favors faster tightening. The Fed is due to decide on policy on the 17th in Korean time, with speculation that its 3.5%-3.75% rate could rise to 3.75%-4%, although analysts say a U.S. hike may have a smaller effect on the dollar because of the country’s large fiscal deficit and the Middle East war’s impact. The yen-dollar rate has fallen from 159.82 to 154.4 yen per dollar this month, while the won-dollar rate declined from 1,370.4 to 1,347.3 won per dollar.