| The yen extended declines against the dollar after the Bank of Japan lifted interest rates as expected, with two dissents casting doubts on the outlook for further policy tightening. Japan's currency fell as much as 0.6% to 156.94 per greenback. While the move was predicted by all economists surveyed by Bloomberg, the vote was 7-2 as board members Toichiro Asada and Ayano Sato dissented. The outcome is "not hawkish enough for markets and should push USDJPY higher and front-end JPY yields lower," said Chidu Narayanan, chief APAC strategist at Wells Fargo. "Two dissents at this meeting, albeit from the two most dovish members of the board, does not support market expectations of a slew of rapid rates hikes from the BOJ." Traders will focus on BOJ Governor Kazuo Ueda's post-decision press conference, which typically starts at 3:30 p.m. in Tokyo, for clues on the pace and scope of further tightening. ALSO READ: US Fed Rate Hike: Trump Demands 1% Or Lower Interest Rates — 'Warsh Has Tough Board' The Federal Reserve's hawkish hike earlier this week pushed the yen weaker after a sharp rally earlier this month fueled by expectations of faster BOJ tightening, an unwind of yen-funded carry trades and speculation that Japanese pension funds could shift more money to domestic assets. Strategists say dollar-yen could climb toward 160 if investors conclude the BOJ's tightening path will struggle to keep pace with the Fed's. The risk is particularly acute if subsequent communication from the BOJ is interpreted as dovish, given that a quarter-point increase had already been largely priced into markets. The latest slide also puts intervention risk back in focus after Japan and the US carried out their first coordinated yen-buying operation this summer since 1998. Officials have emphasized the speed and disorderliness of currency moves rather than any specific level, but another push toward 160 could test their tolerance. Japan spent a record ¥15.4 trillion ($98.3 billion) on intervention in the month through Aug. 26, according to Finance Ministry data. US Treasury Secretary Scott Bessent has since continued to signal support for a stronger yen, potentially adding to traders' reluctance to rebuild bearish positions. ALSO READ: US Fed Lifts Interest Rates After Three Years: How Will It Impact Indian Stock Market Today? |
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