15.12.202502:25:47UTC+00Yen Edges Higher Ahead of BOJ Meeting

The Japanese yen strengthened to approximately 155.5 against the U.S. dollar on Monday, recouping losses from the prior session as investors geared up for the Bank of Japan's upcoming policy meeting this week. It is widely anticipated that the central bank will increase its policy rate by 25 basis points, reaching 0.75%. Market participants will closely scrutinize the commentary from Governor Kazuo Ueda following the meeting to gain insight into the policy direction for the coming year. Analysts predict that the policy rate could climb to 1% by July. The expectation of a tighter monetary policy has been bolstered by strong domestic economic indicators, including consumer inflation rates that remain above historical averages. Reports indicate that senior officials in Prime Minister Sanae Takaichi's cabinet are unlikely to oppose the anticipated rate hike, expressing concerns that a devalued yen—partly attributed to the BOJ's delayed tightening approach—is contributing to increased import costs and inflation. Additionally, data from the central bank revealed an improvement in sentiment among large manufacturers, rising to +15 in the fourth quarter from +14 in the preceding quarter, achieving the highest level recorded in four years.