BoJ repricing lifts yen amid rising bond yields and fiscal concerns
The yen jumped after markets moved to price a faster Bank of Japan tightening path, with investors largely expecting a 25-basis-point September hike and the possibility of larger moves later. Ten-year Japanese government bond yields climbed to 3 percent on September 1, the first time since 1996, amid oil-driven inflation fears and fiscal concerns. Japan's initial general-account budget requests hit a record ¥143 trillion, while planned spending and a ¥370 trillion growth strategy raise debt servicing risks, with projected interest costs of ¥36.64 trillion for fiscal 2027; these factors limit the currency's sustainable upside despite near-term BoJ-driven strength.
Ten-year JGB yield rose to 3 percent for the first time since 1996
Context
The dollar/yen moved near the August low after a joint US-Japan intervention in late July. Officials and markets now expect quicker Bank of Japan rate hikes. That could push bond yields and debt costs higher or cap yen gains.
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