Japan's Yen Intervention Sparks Speculation of Faster BOJ Rate Hikes

What happened

Japan coordinated a yen-buying intervention with the U.S. and South Korea in late July and early August, pushing the currency about 5% higher after a 40-year low of 163.99 per dollar. Market expectations for a September Bank of Japan rate hike have risen to 76%, up from 24% on July 30, as traders price in an additional 25 basis points.

Why it matters

The intervention, the first joint one since 1998, and pressure from U.S. Treasury Secretary Scott Bessent suggest policymakers may need to tighten policy sooner. A delay in a September hike could undermine the yen's recovery and damage the BOJ's policy credibility.