Yen falls amid uncertainty over Japan Bank rate hikes

(MENAFN) On Tuesday, the yen experienced a decline as traders grew uncertain about the possibility of the bank of Japan raising interest rates this week. This uncertainty weighed on the yen, which fell against other major currencies while the dollar and euro held steady. The dollar climbed 0.5 percent to 154.76 yen, and the euro increased to 167.65 yen.

The Bank of Japan is in the midst of a two-day monetary policy meeting, with its interest rate decision expected to be announced on Wednesday. Market expectations are leaning towards another rate hike, building on the increase made in March, which was the first rate hike in 17 years. Currently, there is just over a 50 percent probability that the bank will implement a 10 basis point rate increase.

The yen has been under pressure due to a significant disparity between Japanese and other global interest rates. Earlier in July, the yen fell to its lowest point in nearly 38 years, though recent interventions and other factors have led to a partial rebound. The Bank of Japan is expected to outline plans for quantitative tightening, including a gradual reduction of its monthly bond purchases over the next two years.

In contrast, the Federal Reserve is set to meet on Wednesday and is anticipated to keep interest rates steady, although there is speculation that rate cuts may begin in September. Meanwhile, the euro appreciated slightly against the dollar, rising 0.1 percent to USD1.0832. 

MENAFN31072024000045015682ID1108502490