The Japanese yen rose following the Bank of Japan’s (BoJ) interest rate hike and its detailed plan for quantitative tightening.
Earlier in the month, the yen had hit near 38-year lows due to significant interest rate differentials between Japan and other developed nations.
The rate hike follows currency interventions by the Ministry of Finance (MOF), prompting a reassessment of popular carry trades, which drove the yen’s rebound.
Japanese government bond yields were volatile and jumped in reaction to the BoJ’s announced plans to cut its monthly bond purchases to about 3 trillion yen by early 2026. Japanese yields could see further increases if the trend in monetary policy tightening continues.
Meanwhile, US Treasury yields remained steady as market participants awaited the Federal Reserve’s decision on interest rates. While the Fed is expected to keep rates unchanged today, Treasury yields could fall if the central bank takes a dovish stance and signals a rate cut in September.
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