Markets

Yen Falls to 157.33 After BOJ Rate Hike

By Markets Desk · 2026-09-18 · 1 min read

A traditional Japanese paper coin resting on a wooden table next to a stack of US dollar bills — Illustration: Tradingbird

The Japanese yen dropped 0.9% to 157.33 per US dollar following the Bank of Japan's rate increase.

The Japanese yen fell as much as 0.9% to 157.33 per US dollar. This drop occurred after the Bank of Japan raised interest rates as expected. Two board members voted against the decision. Their dissent raised doubts about future tightening. Short-term Japanese government bond yields also declined.

The yen pared some losses to trade 0.5% lower at 156.75 per US dollar. This shift followed comments from BOJ Governor Kazuo Ueda. He stated that the stage for policy setting has shifted. He emphasized the need to monitor upside price risks carefully. Decisions will be made after firm debate at each meeting.

Dissenting Votes Signal Policy Uncertainty

The vote to hike rates was 7-2. Board members Toichiro Asada and Ayano Sato dissented. These are the two most dovish members of the board. Their vote does not support expectations of rapid rate hikes. The outcome was not hawkish enough for markets. This should push USD/JPY higher and front-end yields lower.

Market Reaction Across Asset Classes

Japan’s Nikkei 225 gained 1.4% in afternoon trading. This rise coincided with the weakening yen. The Topix index remained little changed. Financial shares weighed on the broader gauge. Japanese government bonds showed mixed performance. Spillover in other currency and bond markets was limited. The BOJ hike followed a hawkish US Federal Reserve move. That earlier move pushed the yen weaker.

Intervention Risks Return To Focus

Strategists say the dollar-yen pair could climb towards 160. This happens if investors see the BOJ tightening path lagging the Fed. The risk is acute if BOJ communication appears dovish. A quarter-point increase was already priced into markets. Japan and the US coordinated yen-buying operations this summer. This was the first such action since 1998. Japan spent a record 15.4 trillion yen on intervention. US Treasury Secretary Scott Bessent supports a stronger yen. Traders remain reluctant to rebuild bearish positions. As noted by GN markets/fx (en-US), the current slide puts intervention risks back in focus.

Based on reporting by The Business Times, compiled by the Tradingbird desk.