Yen Hits 8-week High Anticipating BOJ’s Interest Rate Hike Policy

Reuters

10:25 JST, February 7, 2025

NEW YORK (Reuters) — The yen touched an eight-week high versus the dollar on Thursday after a Bank of Japan policy board member advocated continued interest rate hikes, while sterling slid as the Bank of England cut rates.

The yen strengthened as far as 151.81 per dollar – the strongest level since December 12 — in the Tokyo morning, after the BOJ’s Naoki Tamura said the central bank must raise rates to at least 1% or so in the latter half of fiscal 2025 with upward risks to prices rising.

Japan’s currency was last changing hands at 151.335 per dollar, up 0.82% on the previous day, paring some of the early gains after Tamura clarified that he didn’t mean that the neutral rate should be 1%.

There seems to be a good amount of yen buying pressure today (Thursday). Not really sure what’s driving that, but it’s been very correlated to rates, and that’s breaking down just a little bit today, said Brad Bechtel, global head of FX at Jefferies in New York.

The market is currently pricing in a quarter-percentage-point BOJ rate hike by September.

Tamura is known to be on the hawkish side, although his comments initially “fired up yen longs,” said Shoki Omori, chief global desk strategist at Mizuho Securities.