Yen surges to 153 per dollar as BOJ hike bets build

  • Yen buying strengthened the currency to the 153-per-dollar range in Tokyo on Sept. 8.
  • 0.25 percentage-point BOJ hike was nearly fully priced for the Sept. 17-18 meeting.
  • Japanese government and BOJ intervention had occurred in late April-May and again in July.

The yen strengthened into the 153-per-dollar range in Tokyo on Sept. 8, its strongest level since mid-February, as hedge funds and medium- to long-term investors unwound short-yen positions (bets against the currency). Markets are increasingly focused on the possibility of joint foreign-exchange intervention by U.S. and Japanese monetary authorities, while the Bank of Japan, or BOJ (Japan's central bank), is expected to raise its policy rate by 0.25 percentage points at its Sept. 17-18 meeting. Expectations that the BOJ could continue raising rates about once every three months, and that its terminal policy rate could exceed earlier forecasts, are also supporting the yen. The dollar's haven demand has weakened as Iran's Foreign Ministry said Sept. 7 that talks with Oman on a temporary shipping route through the Strait of Hormuz were in their final stage, with an agreement possible within days. The yen's next move will depend on the BOJ's actual hiking pace, U.S. and Japanese authorities' response, and developments in the Middle East.

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