The Japanese yen is the worst-performing major currency against the US dollar throughout 2025, despite the Bank of Japan (BOJ) raising interest rates. Even with further tightening measures, the yen could remain in the "danger zone" that could trigger government intervention. The BOJ is expected to raise interest rates by a quarter percentage point on Friday, bringing the policy rate to a three-decade high of 0.75%.

Futures indicate the possibility of additional hikes of around 40 basis points next year, making the BOJ one of the most aggressive G10 central banks, alongside the Reserve Bank of New Zealand and the Reserve Bank of Australia. Investors will be closely watching BOJ Governor Kazuo Ueda's remarks for clues on whether further tightening is on the horizon.

However, a rate hike is unlikely to guarantee a yen recovery in 2026. Most major central banks are nearing the end of their monetary policy easing cycles, with the exception of the US Federal Reserve. If other central banks begin tightening policy next year, the gap with the BOJ could narrow rapidly, potentially keeping pressure on the yen high. (az)

Source: Newsmaker.id