The yen rose in Asian trading on Monday against a basket of major currencies, recording its first gains in four sessions against the dollar, moving away from its lowest levels in three weeks. The yen’s rise came after optimistic statements from the Bank of Japan Governor, Kozo Oyida, regarding the need to normalize monetary policies. These statements increased the likelihood of a later interest rate hike this year, providing support for the yen.
Bank of Japan Governor Kozo Oyida stated that the central bank is cautiously moving towards achieving its economic goals, with a focus on policy normalization in the near future. He emphasized that weak consumption and rising government bond yields in Japan would not hinder these normalization efforts. His deputy, Shinichi Ushida, pointed out the challenges the bank faces in maintaining inflation at the 2% target but indicated that the bank is prepared to normalize policies.
Regarding Japanese interest rates, a Reuters survey indicated that many analysts expect the Bank of Japan to raise interest rates either in the third or fourth quarter of the year.
As for U.S. bond yields, it is also likely that the Bank of Japan will soon reduce its purchases of government bonds, leading to an increase in bond yields for 10-year bonds to their highest level in 12 years at 1.005% on Friday.
