SINGAPORE/LONDON
The yen fell sharply on Friday as traders drove it towards levels that could trigger official buying after the Bank of Japan raised rates but did not offer much of a hint over future hikes.
The yen fell against the dollar after the BOJ lifted its policy rate to 0.75 percent from 0.5 percent in a move that had been well telegraphed by policymakers, prompting traders to sell.
Losses in the Japanese currency extended after BOJ Governor Kazuo Ueda’s post-meeting press conference, where he remained vague on the exact timing and pace of future rate hikes.
The dollar rose as much as 1.2 percent on the day at one point to a high of 157.365 yen, set for its largest one-day rise since early October and its strongest in a month. It was last up 1.1percent at 157.22 yen. The euro hit a record high of 183.25 yen and the pound rose by as much as 1.22 percent to its highest since 2008, at 210.58 yen.
In Friday’s statement, the BOJ maintained its view that underlying inflation will converge around its 2 percent target in the latter half of its three-year projection period through fiscal 2027. It reiterated real rates were at “significantly” low levels even after the hike, and pledged to continue tightening should the economy and inflation pan out as forecast.
But none of this was enough to halt the slide in the yen. Traders have started to consider the chances of official intervention to support the currency once the yen crossed the 155 level against the dollar in November.
The last time Tokyo authorities stepped into the market to intervene was July 2024, when the dollar/yen rate hit 161.96, the most since the mid-1980s.
