Yen Slumps After BOJ Raises Rates as Expected

The yen weakened against its major peers in Asian trading on Friday after the Bank of Japan raised interest rates as widely expected, but the move failed to halt the currency's decline, Gregor Stuart Hunter reported for Reuters.

The Japanese yen weakened against the dollar after the Bank of Japan raised interest rates to 1.25% on Sept. 18.

The Japanese currency weakened 0.6% to 156.91 yen per dollar, resuming its slide after snapping a three-day losing streak on Thursday.

The BOJ raised its policy rate to 1.25%, the highest level in 31 years.

The decision was not unanimous, with two members of the BOJ's policy board voting to keep the policy rate unchanged. Against the euro, the yen was 0.7% weaker at 180.21 yen.

The yen's weakness followed data showing that Japan's core consumer inflation rose 1.7% year-on-year in August, remaining close to the BOJ's 2% target.

A measure excluding fresh food and fuel rose 1.9%.

Attention then turned to BOJ Governor Kazuo Ueda's news conference, where markets were looking for indications about the pace and timing of further policy normalization.

“The market will be looking for confirmation that further normalization remains firmly on the table, while assessing whether the Bank sees any urgency to move again,” Chris Weston, head of research at Pepperstone Group in Melbourne, said, according to Reuters.