Dollar Hits 158.05 Yen on BOJ Dissent

The US dollar rose 0.5% to 156.725 yen against the Japanese currency on Friday. It had earlier touched 158.05 yen, a two-week high. This rally marked the dollar's largest weekly gain since October 2025.

The move followed the Bank of Japan's decision to raise interest rates to 1.25%. This is the highest level in 31 years. However, two policymakers dissented from the move. This split vote raised doubts about the central bank's commitment to further tightening.

BOJ split vote weakens yen outlook

Traders viewed the lack of a unanimous vote as a signal of internal division. They expected a more hawkish guidance package from the central bank. The disappointment led to a sell-off in the yen. Strategists noted that the absence of strong hiking language favors dollar strength.

Steven Englander of Standard Chartered stated that the weak hike makes it easier for the dollar to rise. He said the anticipated medium-term dollar strength may have arrived. Ray Attrill of National Australia Bank said the underwhelming decision raised eyebrows among market participants.

Intervention risk remains elevated

Japanese authorities conducted rate checks in the currency market on Friday. The Nikkei newspaper reported these checks as a preliminary step before intervention. Finance Minister Satsuki Katayama warned that Tokyo will not hesitate to act. This follows a joint US-Japan move to boost the yen in late July.

Kevin Ford of Convera noted that a hike that weakens the currency is uncomfortable for policymakers. He said this gives the Ministry of Finance a strong case to push back. Traders remain alert to the risk of coordinated action to support the yen.

Fed hawkishness supports dollar

The BOJ decision comes after the Federal Reserve sent a hawkish message earlier this week. Strategists said this clears the way for further dollar strength. The contrast between the two central banks supports a positive outlook for the US dollar.