STOCKS | Yen Rises to 157.6 as Bank of Japan Signals Flexible Rate Hikes

The yen rose to 157.6 per dollar on September 3, extending its sharp overnight gains. According to Sina Finance, traders were watching whether Japanese authorities would intervene in the foreign exchange market again, while increasing bets on more aggressive rate hikes by the central bank this year. The yen also strengthened against the euro and the pound. According to Sina Finance, Bank of Japan policy board member Hajime Takata said on September 2 that 2026 marks the start of a "new phase," and that rate hikes will no longer follow a fixed pace but will be implemented flexibly. Bank of Japan Governor Kazuo Ueda said the same day that interest rates would be discussed at all upcoming meetings, suggesting a hike could come at any time. According to Sina Finance, Scotiabank analysts said Takata's remarks implied the size of rate hikes could exceed the central bank's usual 25 basis points, and that markets are now pricing in a cumulative 50 basis points of tightening by year-end. U.S. Treasury Secretary Scott Bessent has also continued to pressure Japan over the yen. Earlier this week, he said he believed the Japanese government and central bank would act to push the yen higher. According to Sina Finance, at the G20 finance ministers' meeting in Asheville, Bessent was reported to have asked the Bank of Japan to raise rates. In the bond market, Japan successfully sold 30-year government bonds on the day, with the average yield slightly above 4% and demand a little weaker than at the previous auction. According to Sina Finance, analysts said the successful auction may indicate that major Japanese financial institutions, such as life insurers, are beginning to increase domestic capital allocation. Earlier this week, Japan's 10-year government bond yield briefly rose to 3%, its highest level since 1996, before easing slightly back below that key level.