Japanese yen fell despite BOJ rate hike.

The Japanese yen (JPY) falls against the US dollar (USD) despite the Bank of Japan (BoJ) board members’ decision to raise the short-term rate target by 15 basis points (bps) from 0%-0.1% to 0.15%-0.25% following the conclusion of its two-day monetary policy review meeting on Wednesday.

Bank of Japan has decided to reduce monthly JGB purchases to ¥3 trillion.

Furthermore, the BoJ agreed to taper Japanese government bonds (JGB) purchases to ¥3 trillion per month as of the first quarter of 2026.

US dollar faces problems ahead of the Fed’s rate announcement on Wednesday.

The US Dollar (USD) faces problems ahead of the Federal Reserve’s (Fed) forthcoming interest rate announcement on Wednesday. While the central bank is projected to keep interest rates unchanged in July, there are growing expectations of a rate cut in September. This speculation is putting pressure on the US dollar.

Daily Market Movers: Japanese Yen Trims Gains ahead of BoJ Decision
Japan’s Chief Cabinet Secretary.

Yoshimasa Hayashi, announced on Tuesday that the Bank of Japan and the government will work closely together. Hayashi highlighted that the BoJ will work closely with the government to execute appropriate monetary policies aimed at meeting the inflation objective.
Japan’s retail sales increased by 3.7% year on year in June, exceeding the projected 3.3% increase and achieving the The highest level in four months. Meanwhile, Retail Sales climbed by 0.6% month on month, down from the previous 1.7% growth.
Japan’s unemployment rate was 2.5% in June, slightly lower than market expectations of 2.6% and the four-month average. This represents the lowest unemployment rate since January.
In a Bloomberg interview on Monday, Atsushi Mimura, Japan’s recently appointed Vice Finance Minister for International Affairs and top foreign exchange official, said that “while the recent depreciation of the Yen has both advantages and disadvantages, the demerits are becoming more noticeable.” Mimura stated that intervention is one of the methods available to combat excessive speculation damaging the currency.

Japan’s top council has called on the government and the Bank of Japan to When developing policy.

The Japan’s top council has called on the government and the Bank of Japan to When developing policy, keep the weaker Japanese yen in mind. The council highlighted that the impact of a weaker yen and increased prices on consumption cannot be ignored.
According to Bank of America, the Federal Open Market Committee (FOMC) can “afford to wait” before making any modifications due to the United States’ solid economic growth. According to the bank, the economy “remains on robust footing” and that the Fed will begin decreasing rates in December.