The Japanese yen strengthened, breaking through 152 per US dollar on Wednesday (October 29th), continuing its two-day rally. Market participants are positioning themselves ahead of this week's Bank of Japan (BOJ) decision. The BOJ is not expected to change interest rates now, but officials are said to be opening discussions about when to raise interest rates further in the future. This pressure arises because Japanese inflation remains stubbornly high. Yen sentiment strengthened after US Treasury Secretary Scott Bessent met with Japanese Finance Minister Satsuki Katayama and said Japan needed a "sound monetary policy"—read by the market as a subtle hint: it's time for the BOJ to stop being so lax.

From Tokyo to Washington, politics are also at play. The Japanese government said it is monitoring the yen's weakening because it is too weak to hurt Japanese households, although a cheap yen actually helps exporters. Meanwhile, US President Donald Trump met with Japan's new Prime Minister, Sanae Takaichi, and promised closer trade relations. The two also signed a cooperation agreement on trade and critical minerals—critical issues for the technology and energy supply chain. So now the yen issue isn't just about BOJ interest rates, but also about US-Japan diplomacy. (az)

Source: Newsmaker.id