USD/JPY falls below 157! The yen becomes the strongest G-10 currency, with the market betting on another rate hike by the central bank next month.

According to Zhitong Finance APP, on Wednesday, the Japanese yen strengthened against the US dollar, with USD/JPY falling below the 157 mark. This movement was supported by a series of warnings from the Japanese government regarding the exchange rate and quarter-end fund flows favoring the yen. During early Asian trading, the yen rose as much as 0.6%, with USD/JPY touching 156.38, making the yen the best-performing currency among the G-10 currencies.

Japan's top foreign exchange official, Atsushi Mimura, told Reuters on Monday that the Japanese prime minister, the finance minister, and US officials had recently sent a "very clear" message about the yen's depreciation. Japanese Prime Minister Sanae Takaichi also stated that when she met with US President Donald Trump last week, he expressed similar concerns about the weak yen.

OCBC strategist Moh Siong Sim said, "The market seems to be gradually accepting the view that policy may shift to more support for the yen. Since Trump expressed concerns about the weak yen, the yen has remained firm since the beginning of this week."

Speculation is mounting in the market about a further interest rate hike by the Bank of Japan. After raising the benchmark rate to 1.25% earlier this month, the Bank of Japan may hike rates again as early as next month. So far this quarter, the yen has appreciated by about 3.6%. Previously, Japan and the United States conducted their first joint intervention in 15 years in July to support the yen.

Shinya Koike, manager of the global markets trading department at Sumitomo Mitsui Trust Bank, said that quarter-end fund flows may also be one of the reasons for the yen's rise.