BOJ signals potential rate hike; yen hits multi-month lows

Friday, October 31, 2025 at 03:30 UTC+01:00 (+0100), Japan, Tokyo

News category : Macroeconomic Events

The Bank of Japan’s communications around the end of October signalled a gradual shift from ultra-loose policy, with officials noting that a weaker yen could feed into underlying inflation and wage-setting. The comments coincided with a sharp yen depreciation to multi-month lows, triggering public warnings from Japan’s finance minister about disorderly currency moves. Markets priced a higher probability of earlier BOJ tightening, pushing JGB yields and FX desks to re-run policy scenarios. Investors flagged elevated risks of verbal or even direct intervention if the yen’s slide accelerates, a consideration that could constrain carry trades and affect regional capital flows.

Overall market impact

Mild mixed market impact - strength score : 78/100

Detailed breakdown of market impact over instruments, sectors, and asset classes

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Impacted instruments :

JPY FX pairs

Japanese government bonds (JGBs)

Nikkei and export-oriented stocks

Asia regional FX and equities

Currency intervention risk

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