The yen climbed by more than 1% against the dollar as traders ramped up bets for more aggressive interest rate cuts by the Federal Reserve in 2024 and as they speculated on the timing of the Bank of Japan exiting from negative interest rates.
The Japanese currency surged as much as 1.3% to 140.97 per dollar, passing the four-month high of 141.71 reached last week. The move came as the Fed on Wednesday signaled a pivot to rate cuts and as investors look to the BOJ's meeting next week for any hints on when it will adjust policy.
Remarks last week from BOJ Governor Kazuo Ueda and one of his deputies had fueled speculation the central bank might end the negative rate this month. Such expectations subsided after people familiar with the matter said officials see little need to rush to scrap the policy this month.
A dovish slant by the European Central Bank and Bank of England later today may further highlight the contrast with bets on BOJ policy tightening, supporting yen buying, Kanda said.
The ECB is expected to keep benchmark rates unchanged later in the day, as is the BOE, according to Bloomberg surveys of economists.
Inflation in Japan has remained above the central bank's target of 2% every month since April 2022. Still, BOJ officials have said they want to see further evidence on both inflation and wages growth.
Source : Bloomberg
