The joint US-Japanese intervention has stopped propping up the yen, and a reported public split between US Treasury chief Bessent and Prime Minister Takaichi over BOJ policy casts doubt on any repeat rescue, while tightening bets keep JGB yields elevated.
The Bank of Japan is stepping away from ultra-loose policy toward higher interest rates. Its board has to balance price pressure at home against the yen's weakness, which raises the cost of imports and draws calls from company executives for a more stable exchange rate. How fast to tighten has been the open question since the bank began lifting rates.
The effect of the joint US-Japanese intervention in support of the yen has worn off, the Wall Street Journal reported on Tuesday. Bloomberg reports that a public split between US Treasury chief Bessent and Japan's Prime Minister Takaichi over Bank of Japan policy could undermine any repeat rescue.
Nikkei Asia reported on Monday that expectations of faster interest rate rises by the Bank of Japan pushed up Japanese government bond yields. The Wall Street Journal reported on Tuesday that the yen firmed slightly on prospects of coordinated intervention, while Nikkei put corporate Japan's quarterly profit growth at 70 percent, driven by the weak currency and AI spending.
The Bank of Japan's summary of its July meeting showed board members discussing scope to speed up rate increases and flagging upside risks to prices, according to Reuters and Bloomberg. Japan also posted its first current account deficit in nearly one and a half years, and executives called for exchange-rate stability as the weak yen raises import bills.