The Japanese yen soared to seven-month heights against the U.S. dollar on Tuesday, buoyed by growing speculation of an imminent Bank of Japan interest-rate hike. The currency’s rally comes as traders move away from short positions, anticipating shifts in monetary policy.
The yen climbed to 153.53 per dollar during morning trading, marking its strongest performance since February and surpassing levels reached during Japan’s July intervention. This advance added to the yen’s 1.2% gain during a thin trading session on Monday, influenced by a U.S. holiday. The Japanese currency has appreciated nearly 4% from around 160 yen per dollar just last week.
Analysts credit several factors for the yen’s resurgence, including expectations for a faster Bank of Japan tightening pace, potential fund repatriation by Japanese investors, and a shift in carry trades. The currency’s rebound also coincides with subdued U.S. dollar movements ahead of crucial U.S. inflation data set for release this week. Meanwhile, geopolitical tensions in the Gulf and their potential impact on energy prices are closely watched.
(With inputs from agencies.)
