USD/JPY fell below 157! The yen became the strongest in the G-10. The money market is betting that the central bank will raise interest rates again next month

The Zhitong Finance App learned that on Wednesday, the yen strengthened against the US dollar, and the dollar fell below the 157 mark against the yen, as the Japanese government issued repeated warnings about the exchange rate and financial flows at the end of the quarter to support the yen. In early Asian trading, the yen rose 0.6%, and the dollar hit 156.38 against the yen. The yen performed best among the G-10 currencies.

Japan's top foreign exchange official, Jun Mimura, told Reuters on Monday that Japan's prime minister, finance minister, and the US have recently sent a “very clear” message about the depreciation of the yen. Japanese Prime Minister Sanae Takaichi also said that when US President Trump met with her last week, he expressed the same concern about the weak yen.

Moh Siong Sim, strategist at OCBC Bank, said: “The market seems to be gradually accepting the view that the policy may shift to more support the yen. The yen has remained strong at the beginning of this week since Trump expressed concerns about the weakening yen.”

Market speculation about further interest rate hikes by the Bank of Japan is heating up. After raising the benchmark interest rate to 1.25% earlier this month, the Bank of Japan may raise interest rates again as early as next month. The yen has appreciated about 3.6% so far this quarter. Previously, Japan and the United States made their first joint intervention in 15 years in July to support the yen.

Shinya Koike, head of the global market transaction department at Sumitomo Mitsui Trust Bank, said that financial flows at the end of the quarter may also be one of the reasons for the rise in yen.