FX.co ★ Yen Extends Gains Ahead of BOJ Decision

The Japanese yen appreciated beyond 152 against the dollar on Wednesday, marking its second consecutive session of gains as investors anticipate the Bank of Japan's upcoming policy decision. Although it is widely expected that interest rates will remain unchanged, policymakers are likely to discuss the conditions necessary for resuming rate hikes, particularly as tariff-related risks diminish, despite the ongoing challenge of stubborn inflation clouding the economic horizon. On Tuesday, the yen saw an increase of approximately 0.5% following a meeting between US Treasury Secretary Scott Bessent and Finance Minister Satsuki Katayama, during which they addressed currency volatility. Bessent's call for "sound monetary policy" was perceived as a subtle critique of Japan's gradual approach to rate normalization. Japan's Minister for Economic Revitalization emphasized the government's vigilance regarding the yen's depreciation while acknowledging the competitive edge it provides to exporters. Concurrently, US President Donald Trump engaged with Japan's new Prime Minister, Sanae Takaichi, on Tuesday to reinforce US-Japan relations, culminating in the signing of agreements on trade and critical minerals.