Yen climbs to six-month high against dollar as rate hike looms

The yen strengthened to 153.16 per dollar on Tuesday, reaching its highest level in six months as traders considered the possibility of a Bank of Japan interest-rate increase in mid-September.

At 11 a.m. local time, the currency had gained almost two yen from the previous session. Analysts have increasingly expected the central bank to raise its short-term policy rate again after lifting it to 1 percent in June, its highest level in 31 years.

Bank of Japan Governor Kazuo Ueda warned last week about rising inflation and indicated that a rate increase could come at the bank's next meeting, scheduled for the middle of the month. U.S. Treasury Secretary Scott Bessent, who met with Ueda and Japanese Finance Minister Satsuki Katayama on the sidelines of the G20 meeting in the United States, stressed the importance of Japan showing markets its commitment to fiscal sustainability and higher interest rates.

Japan and the United States intervened in currency markets on July 31 to halt the yen's persistent decline. The yen had been trading near 164 per dollar, its weakest level in almost 40 years. Japan's Finance Ministry said the intervention cost 15.4 trillion yen, equivalent to 82.8 billion euros.