The Japanese yen strengthened to around 157.5 per dollar on Monday, marking its third consecutive day of gains amid thin holiday trading volumes.
Yen rises on BOJ hike hopes and safe-haven demand
The currency found support following speculation that Bank of Japan (BOJ) policymakers might raise their inflation forecasts at their upcoming policy meeting this month, which could signal further interest rate hikes. Last week, Japan’s Economy Minister Ryosei Akazawa acknowledged that the economy is at a "critical stage" in overcoming the public's deflationary mindset but did not specify when the BOJ might take action. Additionally, the yen benefited from safe-haven flows, as stronger-than-expected US economic data and hawkish expectations for Federal Reserve policy fueled risk-off sentiment in global markets.
Global concerns boost yen as safe-haven asset
Investors are closely watching developments in the US and Japan, with concerns over global economic stability continuing to drive demand for the yen as a protective asset.
