Here’s a more polished rewrite with a market-news style:
A former Bank of Japan official has warned that the central bank could accelerate its rate-hiking cycle as the yen continues to lose ground against the U.S. dollar, potentially pushing borrowing costs above 2%.
Tsutomu Watanabe, a University of Tokyo economics professor and former BOJ policymaker, said Japan may need to raise rates more quickly this year, according to Bloomberg.
The BOJ’s benchmark rate currently sits at 1% following a series of recent increases, while Japan’s 10-year government bond yield has climbed above 2.8%, reaching levels not seen in at least three decades, according to TradingView data.
Despite tighter monetary policy and rising bond yields, the yen has continued to weaken. The currency has fallen nearly 60% against the dollar since early 2021, trading around 162.36 per dollar, and has declined about 3% so far this year.
Further BOJ rate hikes could provide support for the yen and potentially trigger a recovery. However, the broader impact on bitcoin remains uncertain.
Some market participants have long argued that a stronger yen could unwind carry trades, where investors borrow cheaply in yen to fund positions in global bonds, technology stocks, and cryptocurrencies. A reversal of those trades could put pressure on risk assets, including digital currencies.
However, recent market behavior has challenged that assumption, as bitcoin and the yen have moved in a similar direction against the dollar, both facing weakness rather than moving inversely.
Meanwhile, economists have also raised concerns that aggressive rate increases could put additional pressure on Japan’s already stretched fiscal position.
With currency markets, monetary policy, and risk assets all closely connected, the outcome remains difficult to predict.
