Published by Global Banking & Finance Review®
Posted on December 29, 2025
3 min readLast updated: January 20, 2026
Add as preferred source on GoogleThe yen strengthened after BOJ minutes revealed rate hike discussions, with markets assessing intervention odds. The BOJ raised its rate to 0.75%.
By Chuck Mikolajczak
NEW YORK, Dec 29 (Reuters) - The yen strengthened on Monday in light holiday trading, on track for its fifth gain in six sessions as markets weighed the timing of additional interest rate hikes in Japan and the chances of intervention.
Bank of Japan policymakers debated the need to continue raising rates, the minutes from its policy meeting earlier in December, when the central bank hiked its policy rate to a 30-year high of 0.75% from 0.5%, showed on Monday.
Finance Minister Satsuki Katayama said last week that Japan has a free hand in dealing with excessive moves in the yen, and similar statements from officials have helped stem the softening in the Japanese currency against the dollar in recent days.
"The conditions for intervention don't exist right now and those conditions would be dramatic price action or high volatility... since they hiked rates, it has chopped around a bit, but I don't think the threshold's there," said Marc Chandler, chief market strategist at Bannockburn Capital Markets in New York.
"The market is focused on next year, people who are trading today and tomorrow are sort of last minute kind of things, they tend to be small orders and people who have to do them, so I won't take much of a signal from this, we've been consolidating for a few days."
The dollar index, which measures the greenback against a basket of currencies, rose 0.09% to 98.12, with the euro down 0.12% at $1.1757. Sterling weakened 0.04% to $1.3489.
Against the Japanese yen, the dollar weakened 0.23% to 156.18.
In a note on Monday, Torsten Slok, chief economist at Apollo Global Management in New York, said the yen has traded much weaker than interest rate differentials alone would suggest over the past six months, "indicating that growing concerns about Japan’s fiscal position in a rising rate environment are starting to dominate."
Despite the rate hike at the BOJ's December 19 meeting, the yen weakened to a one-month low of 157.77 per dollar, prompting intervention warnings. Japan last stepped into markets to defend its currency in July 2024, buying yen after the currency hit a 38-year low of 161.96.
The economic calendar is thin in most markets ahead of the New Year holiday, although U.S. data showed pending home sales rose 3.3% last month after an upwardly revised 2.4% gain in October, the National Association of Realtors said. The index tracking sales rose to its highest level since February 2023.
Tuesday will bring about the release of minutes from the Federal Open Market Committee's meeting earlier this month in which the U.S. central bank cut rates and projected just one more reduction for next year, although markets have priced in roughly two more.
In cryptocurrencies, bitcoin fell 0.13% to $87,432.89.
(Reporting by Chuck Mikolajczak; additional reporting by Rocky Swift in Tokyo and Alun John in London; Editing by, Kate Mayberry, William Maclean, Chizu Nomiyama and David Gregorio)
Foreign exchange, or forex, is the global marketplace for trading national currencies against one another. It is the largest financial market in the world, facilitating international trade and investment.
Currency hedging is a risk management strategy used to protect against fluctuations in exchange rates. It involves using financial instruments to offset potential losses in currency value.
Interest rates are the cost of borrowing money or the return on savings, expressed as a percentage. They are influenced by central banks and affect economic activity.
Financial markets are platforms where buyers and sellers engage in the trading of assets such as stocks, bonds, currencies, and derivatives. They facilitate price discovery and liquidity.
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