Forex
Home›Forex›Major Pairs›Yen slides past 163 per dollar as BOJ rate-hike bets s…
Yen slides past 163 per dollar as BOJ rate-hike bets shift
Yen weakness at one point sent USD/JPY toward the 40-year low, while money markets increased the implied odds of an October BOJ move to 84% from 72% before the latest report.
The yen weakened to beyond 163 per dollar for the first time since 1986 before recovering some ground in choppy trading, as market pricing shifted around expectations for faster interest-rate hikes from the Bank of Japan, according to LiveMint Markets citing Bloomberg.
The currency was last around 163.15 per dollar in New York trading after dipping to 163.24 earlier in the session and briefly rebounding to about 162.70. A Bloomberg report said central bank officials are open to raising rates at a faster pace than the consensus among economists, with the BOJ expected to move roughly once every six months but potentially acting earlier if inflation is entrenched.
Money markets boosted their wagers on a BOJ rate increase by October after the bank raised rates to 1% in June. Overnight-index swaps implied about an 84% chance of a move in October, compared with a 72% likelihood seen before the report.
MUFG strategist Lee Hardman said the news reinforces his view that the next BOJ hike could come as soon as September, while markets see only about a 32% chance for that month. The outlet also pointed to pressures that can overwhelm yen support efforts, including higher oil prices and Japan’s fiscal concerns, as well as renewed FX intervention that did not stop the yen from sliding to fresh 40-year lows, with authorities spending 11.73 trillion yen between April 28 and May 27.