Yen Faces Pressure Amid BOJ Rate Decision and Geopolitical Tensions

The yen remained stable post-BOJ's steady rate decision as the U.S. dollar experienced its biggest weekly decline since June due to geopolitical tensions and policy shifts in Greenland. Traders remain cautious about yen valuations, foreseeing potential market intervention. Japan's inflation concerns and fiscal instability pose further challenges.

The yen stayed rangebound after the Bank of Japan (BOJ) held interest rates steady as anticipated, while the U.S. dollar braced for a significant weekly decline amid geopolitical tensions involving Greenland. Post-decision, the yen slightly weakened to 158.70, despite BOJ's economic and inflation forecasts that indicate potential rate hikes.

Traders are concerned that surpassing the 160-per-dollar mark could prompt Tokyo to intervene in the currency market to prop up the yen. Attention turns to comments from Governor Kazuo Ueda for future rate hike cues and possible hawkish signals to bolster the yen. Ueda is scheduled to address the press at 0630 GMT.

The yen has been under pressure since Sanae Takaichi became Japan's prime minister, mainly due to fiscal concerns, while investors fear that BOJ's monetary policies remain insufficiently supportive amidst rising inflationary risks.

(With inputs from agencies.)