Yen Gains on Hawkish BOJ Signals

The Japanese yen strengthened past 156 per dollar on Thursday, snapping a two-day slide as hawkish signals from the Bank of Japan supported domestic yields. Board member Hajime Takata, regarded as the most hawkish member, called for further rate hikes and for guidance reflecting that the price stability target is nearly met. Governor Kazuo Ueda also reportedly said the central bank will carefully review economic data at its March and April meetings before deciding on rate adjustments, leaving the door open for a near-term hike. These developments followed the Japanese government’s nomination of two reflationist academics to the central bank's policy board, reinforcing expectations that the BOJ will proceed cautiously with further tightening. Prime Minister Sanae Takaichi also reportedly voiced concerns over additional rate hikes during a meeting with Ueda last week.

The Japanese yen traded near 156 per dollar on Wednesday, following a sharp decline in the previous session after reports that Prime Minister Sanae Takaichi expressed concern over further rate hikes in a meeting last week with Bank of Japan Governor Kazuo Ueda. Takaichi also nominated two reflationist academics to the central bank’s policy board, reinforcing expectations that the BOJ will take a cautious approach to further rate increases. Known for her pro-stimulus stance, Takaichi supports both expansionary fiscal policies and looser monetary settings, creating uncertainty around the pace of BOJ rate hikes even as speculation mounts that the central bank could resume policy normalization later this year. Separately, earlier reports indicated that US authorities had proactively conducted rate checks last month to support the yen and were ready to coordinate intervention at Japan’s request.

The Japanese yen weakened to around 155 per dollar on Tuesday, reversing gains from the previous session as the dollar found support despite ongoing US trade uncertainties. Over the weekend, US President Donald Trump threatened to raise global tariffs from 10% to 15% following a Supreme Court ruling striking down his reciprocal tariffs, and warned of steeper duties on countries that “play games” with existing trade agreements. Tokyo urged Washington to ensure the ruling would not harm Japanese firms and reaffirmed its commitment to the US trade deal. Meanwhile, Japanese media reported that US authorities had proactively conducted rate checks last month to support the yen and were prepared to coordinate intervention at Japan’s request. The reports noted that US Treasury Secretary Scott Bessent led the effort, citing concerns that political uncertainty ahead of Japan’s general election could destabilize markets.