Yen Weakens as BOJ Hikes Rates

2026-09-18 01:09 By Jam Kaimo Samonte 1 min. read

The Japanese yen weakened toward 157 per dollar on Friday, hitting two-week lows after the Bank of Japan raised its policy rate by 25 basis points to 1.25% in a widely expected move, the highest level since 1995.

Investors will now seek guidance on the potential for further tightening as policymakers contend with rising inflation and wages, alongside pressure from US Treasury Secretary Scott Bessent for a more aggressive pace of rate increases.

Meanwhile, Japan’s core inflation eased to 1.7% in August from 1.8% in July, marking its first slowdown in four months.

However, expectations that price pressures could strengthen in the coming months continued to support a hawkish BOJ outlook, with disruptions stemming from the Middle East adding to inflation risks.

Earlier this month, the yen climbed to seven-month highs on expectations of more aggressive BOJ tightening, recent joint interventions by Tokyo and Washington, and prospects of greater capital repatriation by Japanese investors.



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Yen Weakens as BOJ Hikes Rates
The Japanese yen weakened to around 157 per dollar on Friday, touching two-week lows after the Bank of Japan delivered a widely anticipated interest-rate hike. The central bank lifted its policy rate by 25 basis points to 1.25%, its highest level since April 1995, as policymakers contend with persistent inflationary pressures and ongoing disruptions from the Middle East. The decision was not unanimous, however, with board members Toichiro Asada and Ayano Sato voting against the increase. Attention now turns to the BOJ’s guidance on the scope and timing of further policy tightening. Analysts have indicated that Japan’s tightening cycle may struggle to match the pace of Federal Reserve rate increases, following the Fed’s hawkish hike earlier this week. Meanwhile, Japan’s core inflation slowed to 1.7% in August from 1.8% in July, marking its first decline in four months.
2026-09-18
Yen Weakens as BOJ Hikes Rates
The Japanese yen weakened toward 157 per dollar on Friday, hitting two-week lows after the Bank of Japan raised its policy rate by 25 basis points to 1.25% in a widely expected move, the highest level since 1995. Investors will now seek guidance on the potential for further tightening as policymakers contend with rising inflation and wages, alongside pressure from US Treasury Secretary Scott Bessent for a more aggressive pace of rate increases. Meanwhile, Japan’s core inflation eased to 1.7% in August from 1.8% in July, marking its first slowdown in four months. However, expectations that price pressures could strengthen in the coming months continued to support a hawkish BOJ outlook, with disruptions stemming from the Middle East adding to inflation risks. Earlier this month, the yen climbed to seven-month highs on expectations of more aggressive BOJ tightening, recent joint interventions by Tokyo and Washington, and prospects of greater capital repatriation by Japanese investors.
2026-09-18
Yen Holds Decline on Hawkish Fed Outlook
The Japanese yen traded around 156.1 per dollar on Thursday after sliding for three straight sessions, pressured mainly by the dollar’s strength following the latest Federal Reserve policy decision. The US central bank raised interest rates for the first time in three years and signaled additional tightening this year to contain inflation. The Bank of Japan is also expected to raise borrowing costs on Friday, with another increase anticipated by the end of January. On the geopolitical front, oil prices eased amid hopes that Saudi Arabia can restore energy flows through its East-West pipeline. The yen had climbed to seven-month highs earlier this month on expectations of more aggressive policy tightening by the BOJ, recent joint interventions by Tokyo and Washington, and prospects for increased capital repatriation by Japanese investors.
2026-09-17