The Japanese yen rose 1% against the US dollar, reaching its highest level in six weeks, as investors speculated on a potential interest rate hike by the Bank of Japan (BOJ) next month. The yen traded near 150 per dollar following data showing Tokyo's core Consumer Price Index (CPI) increased by 2.2% year-on-year in November, surpassing economists' expectations of 2%. The overall inflation rate climbed to 2.6% due to rising food prices.
Tokyo's inflation figures are often seen as a leading indicator of nationwide trends, suggesting persistent inflationary momentum in Japan. This has fueled market speculation about a BOJ rate hike, especially after BOJ Governor Kazuo Ueda indicated readiness to increase borrowing costs if economic conditions align.
Attention is also on potential shifts in benchmark rates between Japan and the US, with traders preparing for possible BOJ rate hikes and US rate cuts. Analysts note a more than 60% chance of these rate changes, with expectations of yen appreciation against the dollar.
