The yen appreciated against the dollar on July 31 after the Bank of Japan (BOJ) raised interest rates for the second time in 17 years. Asian stock markets rose on rising hopes of a cut in US borrowing costs, AFP reported.
After more than a decade of ultra-loose monetary policy to boost a stifling economy and falling inflation, the ECB changed its focus this year.
In March, interest rates were raised to around 0.1% - the first increase since 2007.
The move marked a retreat from a long-running campaign of negative interest rates. The July 31 decision set interest rates at 0.25%.
In recent days, bets on another hike by the Central Bank have grown, sending the yen to 152.12 to the dollar, its best month in a year and a half.
"While the recent depreciation of the yen has both advantages and disadvantages, the downsides are becoming more prominent," said YCB senior official Atsushi Mimura in an interview with Bloomberg, pointing to higher energy and food prices as well as the effect on importers.
The yen's appreciation comes just weeks after the currency hit a near four-year low of 162 points in early July. Higher interest rates raise the yield on government securities, making the asset more attractive to anyone looking for better returns. | BGNES
