Yen weakens toward 158 per dollar as Bank of Japan uncertainty persists

The yen declined against major currencies on Monday, November 2, extending its losses as investors reassessed the Bank of Japan's interest rate outlook following last week's policy decision.

The currency struggled despite renewed warnings from Japanese authorities against excessive exchange rate movements, while expectations of further Federal Reserve tightening continued to support the dollar.

Price overview

USD/JPY rose 0.23% to 157.95 yen in Monday's morning trading, while fluctuating between 157.44 and 157.98 yen during the session.

EUR/JPY advanced 0.39% to 176.51 yen, while GBP/JPY gained 0.25% to 211.49 yen.

Bank of Japan outlook weighs on yen

The Bank of Japan maintained its benchmark interest rate at 1.25% on Friday, with an 8–1 vote, although one policymaker favored an immediate increase.

The decision disappointed investors seeking clearer indications of another rate increase in December.

Although policymakers acknowledged persistent inflationary pressures, uncertainty over the timing of further tightening continued to undermine the yen.

Intervention warnings offer limited support

Japanese Finance Minister Satsuki Katayama reiterated that authorities remain prepared to respond to excessive or disorderly currency movements.

However, the warning provided little immediate relief, with the yen remaining vulnerable to the substantial interest rate differential between Japan and the United States.

Federal Reserve expectations support dollar

The Federal Reserve maintained borrowing costs at 3.75%–4.00% last week, while two policymakers supported an immediate increase.

Strong US economic growth and persistent inflation have reinforced expectations of another rate increase in December.

Market outlook

USD/JPY faces immediate resistance near 158.00, followed by 158.34, while support stands around 157.44.

The yen's direction will depend on Japanese monetary policy expectations and US Treasury yields, with Tuesday's midterm elections adding another source of uncertainty for currency markets.