The dollar jumped against the yen on Friday after two Bank of Japan policymakers dissented from a widely expected rate hike, raising doubt about further increases. The BOJ pushed rates to their highest level in 31 years, yet the lack of hawkish guidance sent the yen sliding and rattled US bond and stock futures markets.
The dollar rose 1.2% against the yen to a two-week high of 157.897 on Friday. That marked its biggest daily gain versus the yen since December and its largest weekly rally since September 2024. The move came after two BOJ policymakers dissented from the bank's decision to raise rates.
Dissent undercuts the hike
The BOJ pushed rates to their highest level in 31 years at 1.25%, but the rate hike failed to lift the yen because traders judged the guidance insufficiently hawkish. Steven Englander, head of G10 FX research at Standard Chartered, said the "lack of hiking punch makes it easier for USD to go higher." The dollar wavered during BOJ Governor Kazuo Ueda's press conference before extending its advance.
National Australia Bank FX strategy head Ray Attrill said the BOJ underwhelmed against expectations, noting that the bank could not even secure a unanimous vote. That split, coming days after the Federal Reserve's own hawkish signal, clears the way for further dollar strength, strategists said.
Bond markets react
The softer guidance also rattled US bond markets. Market strategist Gareth Soloway said the tone pushed the 10-year Treasury yield back up to 4.984%. He linked that move to a sharp reversal in S&P 500 futures overnight, pointing to concern that global central banks, including Japan with debt at 230% of GDP, may not be serious about controlling their debt loads.
Intervention risk builds
Tokyo has stayed alert to the yen's slide. Finance Minister Satsuki Katayama said Tokyo won't hesitate to conduct further coordinated action, following a joint US-Japan move to support the yen in late July. Separately, the BOJ has reportedly conducted rate checks in the foreign exchange market, calling banks and dealers to ask about indicative exchange rates without executing trades — widely seen as the first step in Japan's intervention playbook.
Japan's foreign reserves, reported at roughly $1.16 trillion as of December 2025, give Tokyo substantial capacity to intervene directly if rate checks alone fail to slow the yen's decline.
Sources: Investing.com, Coinpedia, Crypto Briefing
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