The Japanese yen strengthened past 154 per dollar on Tuesday, reaching its strongest level since February and reversing forces that had driven it to a 40-year low in July. The move was supported by the unwinding of carry trades (borrowing cheaply to invest in higher-yielding assets), expectations that capital will return to Japan and rising US political pressure for Tokyo to support the yen through tighter monetary policy. Markets now expect the Bank of Japan to raise interest rates this month. An economic adviser to Prime Minister Sanae Takaichi said the central bank is likely to hike rates in September and raise rates again by January next year. The comments point to growing recognition within the Takaichi administration, which has previously favored a dovish approach, that additional BOJ tightening may be needed to restrain excessive yen weakness. Separate data showed Japanese wages rose at their fastest pace since 1997, reinforcing expectations for a more hawkish policy stance.