Forex-Dollar hovers near seven-month low vs yen as oil tops $100
SPY•Yen gains as BOJ meeting approaches
The yen remained in focus after rising 4% so far this month, challenging the economics of the carry trade, in which investors borrow cheaply in yen to invest in higher-yielding assets elsewhere.
The Japanese currency has strengthened broadly, not only against the dollar but also versus the euro and sterling, as well as against popular carry-trade currencies such as the Mexican peso and Turkish lira.
Gains have been driven by expectations of faster Bank of Japan policy tightening, prospects for repatriation flows from Japanese investors and pressure from Washington for a stronger yen.
Treasury Secretary Scott Bessent on Tuesday dared traders to bet against the yen, following historic joint U.S./Japanese intervention to boost the currency in late July to deter Tokyo from selling U.S. Treasuries to fund the operation.
Markets widely expect the BOJ to raise interest rates by 25 basis points at its September 17 to 18 meeting, though further yen gains may depend on whether Governor Kazuo Ueda reinforces hawkish policy signals.
