The Japanese yen rose in Asian trading on Wednesday against a basket of major and minor currencies, extending gains for the second consecutive session against the U.S. dollar. The move reflects a continued recovery from its eight-month low, supported by safe-haven demand amid a broad sell-off in global equity markets.
Minutes from the Bank of Japan’s September meeting showed that a growing number of policymakers believe conditions are now suitable for policy normalization, boosting expectations for a potential rate hike in December.
Price Overview
• USD/JPY rate today: The dollar fell 0.45% to 152.96 yen, down from the opening level of 153.66, after touching a session high of 153.75.
• The yen closed Tuesday up 0.35% against the dollar, rebounding from an eight-month low of 154.48 earlier in the session.
Severe Losses
Following the sharp drop in U.S. equities on Wall Street amid mounting concerns about excessive valuations in artificial intelligence companies, global markets witnessed a widespread sell-off. The downturn triggered intensified selling pressure and heightened worries about the sustainability of recent record highs.
As a result, investors flocked to safe-haven assets such as gold, the Japanese yen, and U.S. Treasury bonds to hedge against increased volatility, while markets closely monitor statements from major central banks for signs of potential intervention or policy adjustments to calm the turmoil.
Bank of Japan
According to the minutes released Wednesday, an increasing number of Bank of Japan policymakers believe the conditions are ripe for a rate hike, with two members calling for an immediate increase.
During the two-day meeting ending September 19, the nine-member board kept interest rates steady at 0.5% for the fifth consecutive time, rejecting proposals from two hawkish members to raise borrowing costs to 0.75%.
With discussions now focused on the precise timing of the next hike, several members said it would not be too late to wait for “more accurate data” before acting.
The minutes highlight growing momentum within the board toward resuming rate hikes, as concerns ease that higher U.S. tariffs could derail Japan’s fragile economic recovery.
Japanese Interest Rate Outlook
• Although Bank of Japan Governor Kazuo Ueda sent his strongest signal yet last week that a rate hike could come in December, markets remain cautious about the central bank’s gradual approach.
• The probability of a 25-basis-point rate increase at the December meeting rose from 50% to 60%.
• Investors now await additional data on inflation, unemployment, and wage trends to reassess the outlook for monetary policy in Japan.
