Market Highlight 04.09.2026

The JPY strengthened by nearly 2% on Thursday, reversing its weakening trend over the past month, as the market increasingly viewed a September rate hike by the Bank of Japan (BOJ) as almost certain and remained alert to potential foreign exchange intervention. Last night, USD/JPY fell to as low as 155,3 at one point and ended its strongest trading day since Tokyo and Washington intervened in the market to support the yen more than a month ago, closing at 155,8. Remarks by FED Governor Christopher Waller on the progress of U.S inflation last night also reduced expectations of a FED rate hike, with the probability now falling to around 50%. However, it remains too early to conclude that the JPY’s weakening trend has fully reversed. The yen’s decline toward 160 per USD earlier this week highlighted market concerns over the BOJ’s upcoming policy decision at its 18/9 meeting.

The JPY remains under pressure from high oil prices and the wide interest-rate differential with the U.S, despite Japan spending a record 96,4 billion USD last month to support the currency. The market is speculating that the Japanese Government could intervene in the foreign exchange market during Silver Week, a three-day holiday beginning immediately after the BOJ’s policy meeting. Forecasts suggest that the BOJ is almost certain to raise interest rates by another 0,25% this month, with around an 80% probability of another hike in December. The JPY’s 2% appreciation against the USD last night provides the clearest evidence that interest-rate hikes by the Bank of Japan could be the most effective measure to support its weak domestic currency.

Interbank USD/VND traded steadily around 26.100 as the market reopened after the public holiday. The effective daily ceiling increased by a further VND 5 on Thursday to 26.895.

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