Yen Weakens as BOJ Signals Caution on Policy Tightening

The yen fell after the Bank of Japan hinted at cautious policy tightening, with Governor Ueda not providing clear signals on future interest rate hikes. The dollar gained against the yen, while markets analyzed consumer price data and a Federal Reserve rate cut. Major currencies showed varied performances in response.

The yen weakened on Friday following a cautious signal from the Bank of Japan regarding further policy tightening. Governor Kazuo Ueda refrained from indicating whether interest rates would rise in the coming months, causing the dollar to climb 0.74% to 143.65 yen.

During the BOJ's unanimous decision to keep the overnight call rate target at 0.25%, Ueda emphasized that monetary policy would depend on future economic, price, and financial developments. 'If our economic and price forecasts are achieved, we will raise interest rates accordingly,' he stated.

The markets reacted with relief as Ueda sidestepped direct comments on rates policy, focusing instead on economic data. Japanese consumer prices showed a core inflation increase to 2.8% in August, while overall inflation hit 3.0%. The week also saw major currency moves, including a strong performance by the euro and speculative buying impacting the yen's value.

(With inputs from agencies.)