FX.co ★ Yen Holds Gains as BOJ Outlook Mulkled

The Japanese yen remained stable at approximately 155.6 on Friday, following two days of upward movement. This stability is bolstered by market speculation that the Bank of Japan may increase interest rates in the coming week, with a trajectory of tightening policies potentially extending into 2026. Earlier in the week, Bank of Japan Governor Kazuo Ueda indicated progress towards achieving the central bank's inflation target, suggesting a possible rate hike in the near future. Investors are keenly awaiting Ueda's comments following the upcoming policy meeting to gain insight into the bank's strategy for the coming year. Reports suggest that leading officials within Prime Minister Sanae Takaichi's administration are not anticipated to oppose an interest rate increase, recognizing that the depreciation of the yen—largely attributed to the Bank of Japan's delayed tightening measures—has escalated import costs and inflation pressures. Additionally, the yen has gained from the broad weakness of the US dollar, following the Federal Reserve's expected rate cuts and a less aggressive stance than the markets had predicted.