By Karen Brettel
NEW YORK (Reuters) – Japan’s yen hit a five-month low against the dollar on Friday after a summary of views from the Bank of Japan’s December policy meeting showed some policymakers were gaining confidence in an imminent rate hike, while the central bank also cut its monthly bond purchases. .
Some Bank of Japan policymakers saw the conditions set for an imminent interest rate hike, with one predicting a move in the near future and keeping the chance of a January hike on the table.
At this month’s meeting, the BOJ kept interest rates unchanged at 0.25%, a move Governor Kazuo Ueda explained was aimed at getting more data on wage momentum next year and clarity on the incoming US administration’s economic policy.
The Bank of Japan will reduce its monthly purchases of Japanese government bonds by another 410 billion yen ($2.6 billion) a month, bringing it down to about 4.5 trillion yen a month from January.
The Japanese currency has weakened in recent weeks as US Treasury yields rise despite the Federal Reserve cutting rates by 100 basis points since September.
Traders are pricing in the likelihood that the US central bank will cut less next year as inflation remains high. Analysts say the new Trump administration’s policies next year will also boost growth and inflation, making traders wary of betting on the greenback.
But some see the Japanese currency eventually rebounding against the dollar, with Treasury yields expected to decline.
The prospect of a BoJ rate hike in the first quarter of next year and the prospect of Treasury yields tapering in the second quarter of 2025 suggest that fair value is now peaking and will be in the mid-130s by the end of next year. this year,” Societe Generale ( OTC: ) analyst Keith Jukes said in a recent report.
Traders will also be watching for any potential intervention by Japanese officials to shore up the currency if it continues to weaken, as they have done several times this year.
Japanese Finance Minister Katsunobu Kato on Friday reiterated his concern over the yen’s decline and reiterated his warning to take measures against excessive currency movements.
The dollar was last down 0.09% at 157.85 Japanese yen. It hit 158.09 on Thursday, its highest since July 17, and is on track for a 12% year-to-date gain against the yen.
It fell 0.06% to 108.02. It hit a two-year high last Friday at 108.54 and is up 6.6% year-over-year.
The euro rose 0.04% to $1.0426, but is on track for a 5.6% annual decline. Sterling rose 0.34% to $1.2568 and is on track for an annual loss of 1.2%.
Onshore, it hit a 13-month low and traded at $7.2950 onshore. The currency has been hurt by threats of additional US tariffs on Chinese goods under Trump.
South Korea’s won fell to a 16-year low of $1,486.7 after parliament impeached incumbent President Han Dak-soo, plunging the country deeper into political chaos.
Cryptocurrency Bitcoin fell by 1.56% to $94,196. This year it has increased by about 122%.