Yen Nears 160 Per Dollar, Stocks Poised to Fall Ahead of BOJ

Investors are on alert for the yen’s potential breach of 160 against the dollar and a decline in Japanese stocks ahead of the Bank of Japan’s rate decision announcement on Thursday.

Japan’s currency dropped as much as 0.6% to 159.90, its weakest level since July 2024, after Federal Reserve Chair Jerome Powell said the US central bank cut interest rates again until inflation resumes cooling. Oil also rose after Iran and Israel traded strikes on key energy facilities in Middle East.

Nikkei futures are trading lower ahead of the stock market opening.

The BOJ is to keep its benchmark rate unchanged on Thursday, but traders will be paying attention to Governor Kazuo Ueda’s press conference for any hints about the next move. Higher oil prices combined with a weakening yen are raising concerns that Japan could face , a scenario that may prompt greater fiscal spending while complicating the central bank’s normalization path.

Japan’s finance minister this week that recent currency moves are not in line with fundamentals, reiterating warnings of possible action by authorities. Still, strategists see a high for intervention as elevated oil prices and resilient US data have pushed the dollar higher on fundamental grounds, potentially making it harder for officials to justify stepping in.

“There’s a fairly high chance the yen could break past the 160 level around the BOJ meeting, and with tomorrow being a Japanese holiday, the near-term focus will be on whether authorities will intervene,” said Yujiro Goto , chief FX strategist at Nomura Securities, in a note.