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Japanese Yen Weakens Despite BoJ Rate Hike
Confirmed
In Short: The Japanese yen weakened despite the Bank of Japan's (BoJ) expected rate hike, as investors focus on future policy signals.
The Japanese yen weakened significantly despite the Bank of Japan's (BoJ) expected rate hike to 1.25%, signaling an acceleration in the pace of rate hikes. The move would raise the interest rate to its highest level in about 31 years, following a rate hike in June.
Traders are now pricing in about a 60% chance of an interest rate hike at the US central bank’s policy meeting, according to the CME FedWatch Tool. The US dollar remains firm, supported by expectations of further rate hikes from the Federal Reserve (Fed).
The Japanese yen's negative reaction may appear counterintuitive following another monetary policy tightening. With the rate hike largely priced in, investors are focusing primarily on signals regarding the future path of monetary policy.
The BoJ's hawkish Governor Ueda's comments opened the door for a rate hike in September, but two surprise dissents against the rate hike have weighed on the yen. The Japanese yen extends losses despite the expected rate hike.
What's confirmed
- The Japanese yen weakened significantly despite the Bank of Japan's (BoJ) expected rate hike to 1.25%, signaling an acceleration in the pace of rate hikes. The move would raise the interest rate to its highest level in about 31 years, following a rate hike in June.
- Traders are now pricing in about a 60% chance of an interest rate hike at the US central bank’s policy meeting, according to the CME FedWatch Tool. The US dollar remains firm, supported by expectations of further rate hikes from the Federal Reserve (Fed).
- The Japanese yen's negative reaction may appear counterintuitive following another monetary policy tightening. With the rate hike largely priced in, investors are focusing primarily on signals regarding the future path of monetary policy.
- The BoJ's hawkish Governor Ueda's comments opened the door for a rate hike in September, but two surprise dissents against the rate hike have weighed on the yen. The Japanese yen extends losses despite the expected rate hike.
What's still developing
- He said a 25-basis-point hike “is not necessarily set in stone,” and that generally speaking, back-to-back rate hikes would be a possibility, too.
- The Japanese government on Friday decided to raise single-entry visa fees for foreigners fivefold to 15,000 yen ($90) from 3,000 yen beginning in July, marking the first increase since 1978 amid inflation and the yen’s depreciation.
- The hikes are expected to bring Japan’s visa issuance fees closer to the levels implemented by the Group of Seven countries.
- US Treasury Secretary Scott Bessent had also called for further interest rate hikes and support for the yen during his recent meetings with Japan’s finance minister and the Bank of Japan governor on the sidelines of the G20 meeting in the United States.
- Reviewed by Rami Haddad, Editor-in-Chief · Last update: 2026.09.10 The Japanese yen rose against a basket of major and minor currencies in Asian trading on Thursday, extending its gains against the US dollar for a fourth consecutive day and moving toward a retest of its seven-month high, supported by continued weakness in the US currency ahead of key inflation data in the United States.
- • The US dollar fell 0.15% against the yen to ¥153.29, from an opening level of ¥153.51, after recording a session high of ¥153.74.
- • The yen ended Wednesday up 0.3% against the dollar, marking its third consecutive daily gain.
- The dollar index fell on Thursday, extending losses for a fourth consecutive session and approaching a three-week low, reflecting continued weakness in the US currency against a basket of global currencies.