The Japanese yen weakened beyond 158 per dollar on Thursday, nearing one-month lows, after the Bank of Japan’s September meeting summary failed to deliver the stronger hawkish signals many investors had anticipated. The document indicated that the central bank is now placing greater emphasis on preventing inflation from overshooting its target, suggesting the possibility of another rate hike this year. However, it offered little detail on the likely timing of such a move ahead of the BOJ’s October and December policy meetings.
Additional downward pressure on the yen came from a stronger US dollar and elevated US Treasury yields, as markets increasingly expect the Federal Reserve may need to raise interest rates further to counter energy-driven inflation. This has reinforced expectations of a wider interest-rate differential between the US and Japan, with the Fed’s tightening cycle continuing to run ahead of the BOJ’s more gradual rate increases.
