The Japanese yen strengthened to around 157.5 per dollar on Monday, marking its third consecutive session of gains in thin holiday trading conditions. The local currency found support amid speculation that Bank of Japan policymakers might raise their inflation forecasts at their upcoming policy meeting this month potentially signaling further interest rate hikes. Last week, Japan’s Economy Minister Ryosei Akazawa noted that the economy is at a “critical stage” in overcoming the public’s deflationary mindset, but did not provide a clear timeline for when the BOJ might act. Additionally, safe-haven flows helped bolster the yen, as stronger-than-expected US economic data and hawkish expectations for Federal Reserve policy sparked risk-off sentiment in global markets.
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