Yen vulnerable with Japan on holiday after BOJ disappoints

A pedestrian walks past an electronic board outside a brokerage in Tokyo on Friday. | REUTERS

Sep 21, 2026

The yen is vulnerable to sharp moves and further declines over the next week, with a three-day holiday in Japan set to reduce trading liquidity and investors disappointed that the central bank didn’t offer stronger guidance on the pace of future interest rate hikes.

The yen steadied around ¥156.86 per dollar Monday after falling as much as 1.3% Friday, when two Bank of Japan board members dissented from a rate hike. A later report that officials had called market participants for a rate check, a prelude to potential currency purchases, only pared losses. The yen fell more than 2% last week, its biggest weekly decline in almost a year.

“Like most other times the yen has gone into a BOJ meeting on the front foot lately, the BOJ has stopped it dead in its tracks,” James Reilly, senior markets economist at Capital Economics, wrote in a note. “It seems fair to say that a material upturn in the yen’s fortunes vis-a-vis the U.S. dollar will depend on the U.S. side.”

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