Yen Tumbles as BOJ's Rate Hike Falls Short

The Japanese yen faced a significant drop after the Bank of Japan increased its policy rate to 0.75% but remained vague on future hikes. This led to speculation about possible intervention to support the yen, as it reached concerning levels against major currencies like the dollar and euro.

The Japanese yen fell sharply on Friday as the Bank of Japan (BOJ) raised rates to 0.75% but offered little guidance on future hikes, leading traders to sell. As a consequence, the yen reached concerning levels against the dollar and euro, sparking speculation about potential official intervention.

The yen's fall was marked with the dollar rising as much as 1.2% against it, hitting a high of 157.365 yen, while the euro achieved a record high of 183.25 yen. Market participants are now wary of interventions, especially with the yen crossing the 155 threshold against the dollar in November.

Financial analysts suggest the possibility of intervention over the holiday period. Meanwhile, the euro dipped temporarily as ECB President Christine Lagarde dismissed hawkish policy stances, and the sterling showed volatility after the Bank of England's interest rate decision.

(With inputs from agencies.)