The Japanese yen was little changed around 159.3 per dollar on Monday after weakening in the previous week, as markets positioned ahead of the upcoming Bank of Japan policy meeting, where interest rates are widely expected to be left unchanged. The central bank is, however, expected to raise its inflation outlook and cut its growth forecast to account for the economic impact of the ongoing conflict in the Middle East.
At the same time, BOJ Governor Kazuo Ueda faces the challenge of signaling the bank’s determination to continue normalizing monetary policy in support of the yen, which has come under renewed pressure from surging oil prices linked to the war involving Iran. Last week, Finance Minister Katayama reiterated that authorities retain a “free hand” to intervene in the foreign exchange market to stabilize the currency, emphasizing their readiness to take “decisive” action against speculative moves.
