FX.co ★ Yen Strengthens as BOJ Keeps Rates Unchanged

The Japanese yen strengthened toward 157 per dollar on Friday, extending its advance for a third straight session after the Bank of Japan left its policy rate unchanged at 1.25%, in line with market expectations. The central bank indicated that underlying inflation has finally reached its 2% target, potentially opening the door to a rate hike in December. The decision was passed by an 8–1 majority, with board member Hajime Taka dissenting in favor of raising rates to 1.5%. He argued that economic conditions have entered a new phase that justifies a faster move toward a neutral interest rate. At the same time, the yen drew additional support from safe-haven demand, as disappointing earnings from major technology companies rekindled concerns over AI-related investments and sparked another equity selloff. In addition, global asset managers have started to return to Japan’s bond market, as firmer domestic demand and a more favorable monetary policy outlook enhance the appeal of Japan’s relatively higher yields.