Yen edges higher ahead of BoJ meeting

The Japanese yen rose toward 155 per dollar on Monday, hitting an over one-week high as investors prepared for the Bank of Japan’s policy meeting this week.

The central bank is widely expected to raise its policy rate by 25 basis points to 0.75%. Market attention will focus on Governor Kazuo Ueda’s post-meeting remarks for guidance on next year’s policy trajectory, with analysts anticipating the policy rate could reach 1% by July.

Expectations for tighter policy have been supported by robust domestic economic data, including consumer inflation remaining above historical levels.

Reports also suggest that senior officials in Prime Minister Sanae Takaichi’s cabinet are unlikely to oppose a rate hike, citing concerns that a weak yen, partly due to delayed BOJ tightening, is driving higher import costs and inflation.

Additionally, central bank data showed sentiment among large manufacturers rose to +15 in Q4 from +14 in Q3, marking the highest reading in four years.