The Japanese yen appreciated roughly 3% versus the U.S. dollar over a two‑day span, ending at 156.25 per dollar on 4 September, up 0.41 (0.26%). Money‑market pricing now reflects a better‑than‑50% probability that the Bank of Japan will deliver two 25‑basis‑point rate hikes by year‑end.
The move follows heavy yen‑supporting intervention by Japanese authorities about a month earlier, but there is little evidence of fresh purchases by the Ministry of Finance. Analysts suggest the recent price action resembles a "rate check" that can precede direct buying, rather than a sustained intervention.
Hawkish remarks from BoJ policymakers have heightened expectations of a rate increase at the September policy meeting. In addition, reports that the Government Pension Investment Fund may shift its portfolio toward domestic assets could provide ancillary support for the currency.
Despite the short‑term rally, Capital Economics warns that past interventions offered only temporary relief because they did not alter underlying dynamics. While tighter BoJ policy and GPIF rebalancing could bolster the yen, the central bank has repeatedly missed market expectations, and Japan's fiscal outlook continues to weigh on the currency. A more durable recovery is viewed as a longer‑term story, likely materializing around 2027.
Market forecasts place USD/JPY at about 160 by the end of 2026, up from the current level near 156.
