2026.01.2303:38:20UTC+00Yen Weakens After BOJ Stands Pat

On Friday, the Japanese yen weakened to approximately 158.7 per dollar, continuing its decline from earlier in the week. This movement followed the Bank of Japan's decision to maintain its policy rate, as predicted by most analysts, after increasing it to a 30-year peak of 0.75% in the previous month. The central bank reiterated its readiness to implement further rate hikes if its economic and inflation forecasts come to fruition, having already upgraded four out of six inflation projections. There is ongoing apprehension among traders that the yen may encounter additional downward pressure unless Governor Kazuo Ueda indicates forthcoming rate increases, particularly given rising fiscal concerns that have led to sell-offs in both domestic bonds and the currency. In the political arena, Prime Minister Sanae Takaichi is preparing to dissolve the parliament for a snap election, aiming to solidify her leadership and expand fiscal measures. Meanwhile, investors are vigilantly watching for any potential currency intervention as the yen edges towards the critical 160 mark.