The Japanese yen hovered around 159.6 per dollar in holiday trading on Wednesday, lingering near the critical 160 threshold even after the Bank of Japan delivered a hawkish hold this week. On Tuesday, the BOJ kept its policy rate unchanged at 0.75% as expected, while raising its inflation outlook and lowering its growth forecast for FY2026 to reflect the economic impact of the Middle East conflict. Notably, three of the nine policy board members supported a rate hike, underscoring growing concern over inflationary pressures tied to the Iran war. BOJ Governor Kazuo Ueda also reaffirmed the central bank’s commitment to a gradual tightening trajectory, signaling that interest rates could continue to rise as economic, price, and financial conditions evolve. Meanwhile, Finance Minister Satsuki Katayama reiterated that authorities stand ready to intervene in currency markets at any time to support the yen.
