FX.co ★ Japanese Yen Extends Rally

The Japanese yen appreciated to approximately 156.7 per dollar on Wednesday, achieving its third consecutive day of gains following signals from the Bank of Japan's October meeting minutes indicating potential further tightening of monetary policy. The minutes detailed an active discussion among policymakers about the necessity of raising interest rates toward a neutral level. Some members argued that increased rates could support long-term economic and price stability. Concerns were also voiced about the potential for a weaker yen to drive inflation higher by increasing import costs. Although the BOJ maintained the interest rate at 0.5% in late October, the discussions suggested emerging conditions favorable for additional hikes. This outlook was confirmed by the December rate increase to 0.75%, the highest in several decades. However, some policymakers urged caution, citing concerns over wage growth, global trade tensions, and the direction of the new government's policies. The markets are currently anticipating the finalization of Tokyo's FY2026 budget, estimated at approximately JPY 122 trillion, with cabinet approval potentially occurring by Friday.