The Bank of Japan may accelerate interest rate hikes! The dollar has sharply dropped against the yen, as the market worries about potential liquidity shocks.

There is a consensus between the Japanese government and the central bank on the need for interest rate hikes in the near future, with the next rate hike window pointing to the central bank meetings on September 18 or October 29-30. Market participants believe that the governments statement indicates they have realized that relying solely on foreign exchange intervention cannot sustainably support the yen, and that the pace of interest rate hikes by the Bank of Japan is crucial for the stabilization of the yen.