Yen weakens as BOJ Governor Ueda hints at rate hike without a timetable.

On November 18,Summary of foreign exchange dealers Bank of Japan Governor Kazuo Ueda delivered a speech, mentioning that the economy is achieving its goal of sustainable inflation driven by rising wages, which provides the possibility for further interest rate hikes. However, due to the lack of a clear timeline for rate hikes, the yen slightly weakened against the dollar during the speech, with the USD/JPY rising by 0.30% to 154.74, having accumulated an 8% increase since October.

Kazuo Ueda noted, "As the economy continues to improve and businesses increase wages, wage-driven inflationary pressures are expected to intensify, creating conditions for another rate hike." Nevertheless, he emphasized that the central bank still needs to be mindful of external risks, including the uncertainty in the U.S. economic outlook and tensions in global financial markets. He stated, "Although the chance of a soft landing for the U.S. economy is increasing, we still need to closely monitor developments."

In terms of policy outlook, Ueda reiterated that if economic and price trends align with the central bank's forecasts, the Bank of Japan will continue to raise rates. He noted that the specific timing of adjusting monetary support will depend on a comprehensive assessment of economic, price, and financial outlooks.

Despite Ueda's comments providing support for future rate hikes, market disappointment over the lack of further guidance on timing was evident, putting pressure on the yen to weaken. Analysts suggest that with the strong dollar and the mild adjustment of the Bank of Japan's stance, the USD/JPY exchange rate may fluctuate at high levels in the short term.

Looking ahead, the Bank of Japan's policy direction will continue to be under close market scrutiny, especially in the complex global economic environment where Japan's inflation target has not yet been fully achieved. Traders need to pay attention to subsequent central bank statements and economic data for further hints on policy adjustments.

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