Japanese Yen Hits 5-week High

The Japanese yen strengthened toward 156 per dollar on Friday, reaching its highest level in five weeks before paring gains as a global selloff in technology and artificial intelligence stocks boosted demand for safe-haven assets. The equity downturn intensified this week after Meta Platforms’ plans to increase capital expenditure reignited concerns that technology companies may take on more debt to fund the AI buildout. In Japan, data showed that both headline and core inflation rose 2.1% year-on-year in September, marking their highest levels in nine months as yen weakness and elevated energy prices drove up import costs. With underlying inflation returning above the Bank of Japan’s 2% target, market expectations for another interest rate hike this year have strengthened. The BOJ is widely anticipated to leave rates unchanged at its upcoming meeting, potentially paving the way for a rate increase in December.

The Japanese Yen touched 156.37 against the USD, the highest since September 2026. Over the past 4 weeks, US Dollar Japanese Yen lost 1.2%, and in the last 12 months, it increased 2.53%.

The Japanese yen strengthened slightly beyond 158 per dollar on Thursday but remained within a tight trading range as investors awaited next week’s Bank of Japan policy meeting. The central bank is widely expected to keep interest rates unchanged before potentially raising them in December amid persistent inflationary pressures. On Wednesday, BOJ Deputy Governor Ryozo Himino noted that underlying inflation was approaching the bank’s 2% target and cautioned against delaying policy adjustments, reinforcing hawkish remarks made by Governor Kazuo Ueda earlier this week. However, the yen continued to face pressure from carry trades, as Japan’s relatively low interest rates reduced the currency’s attractiveness. The BOJ’s gradual pace of monetary tightening is also seen as insufficient to significantly narrow the interest rate differential between Japan and other major economies.