The Japanese yen climbed to 154 per US dollar on Monday 7 September, touching its strongest level since February as expectations grew that the Bank of Japan will proceed with an interest rate increase.
Intervention echoes and rate expectations
The currency had advanced 0.9 percent against the US dollar on Wednesday and followed with a 1 percent gain on Thursday, leaving the greenback at a six-month low against the Japanese currency. Takuji Aida stated on Monday 7 September that the Bank of Japan will likely raise interest rates at its 17-18 September meeting, continuing every three months until January 2027.
A projected move of 25 basis points, or 0.25 percentage points, would bring the policy rate to 1.25 percent. The rebound follows an episode on 29 July when Tokyo and Washington conducted a joint foreign exchange intervention, pulling the pair down to 156.5 yen after it touched a peak rate of 163.9 yen earlier that day. US Treasury Secretary Scott Bessent had said authorities would not hesitate to participate in new joint interventions in the event of disorderly movements.
Fiscal plans and carry trade spillover
Japanese Prime Minister Sanae Takaichi is pushing for a debt-funded two-year suspension of the 8 percent food tax. That proposal is scheduled for an extraordinary parliamentary session in October. Carry trade dynamics also drew scrutiny across other asset classes.
The correlation between bitcoin and the USD/JPY pair stood at -0.90 points over the past 12 months. When the Bank of Japan delivered an unexpected move in August 2024, bitcoin fell 20 percent, dropping from $62,000 to $49,000 before later trading near $80,000 in early September.
Related: Yen surge weighs on dollar as Bank of Japan tightens · Peso opens at 17 per dollar as traders reset rate bets
Source: Bank of Japan | Data: Swissquote
