The Bank of Japan hiked short-term interest rates to 1% Tuesday, lifting the yen as USD/JPY fell to 160.10 in Asian trading.
The Bank of Japan increased its short-term interest rate by 25 basis points to 1% after its two-day policy meeting, matching market expectations. The move strengthened the yen, pushing USD/JPY down to around 160.10 during Asian trading hours on Tuesday, reversing two days of gains for the pair.
Markets had anticipated the rate hike, though the yen’s upside may be limited by cautious sentiment ahead of US-Iran developments. The US Dollar remains supported as shipping firms delay rerouting vessels through the Strait of Hormuz until full transparency is achieved on the proposed agreement.
Traders are also awaiting the Federal Reserve’s policy decision on Wednesday, where rates are expected to remain unchanged at 3.50%-3.75%. Focus will shift to Fed Chair Kevin Warsh’s press conference for signals on future monetary policy direction.