The yen rallied to a one-month high against the dollar and six-week peak versus the euro on Monday, strengthening on hopes the Bank of Japan will soon scrap its ultra-loose monetary policy and eventually raise interest rates. The Japanese currency rose more than one percent against both the dollar and the euro at one stage, extending a rally since Thursday. Speculation has swirled that an upbeat consumer price index report on Friday could prompt the BOJ to end quantitative easing as soon as a meeting late next week. Most analysts expect a policy shift to come at the central bank's late April gathering. Traders said that senior policy makers seemed to be coming round to the idea of an end to the extreme policy sooner rather than later. "Looking at recent comments from the government, it feels like an agreement has been made between the BOJ and the government about the BOJ's policy change," said Hideaki Inoue, forex manager at Mitsubishi Trust and Banking Corp. Prime Minister Junichiro Koizumi said on Monday that a shift in monetary policy would be decided by the BOJ in line with the government and central bank's mandate of defeating deflation. A day earlier, Economics Minister Kaoru Yosano had said that it was up to the BOJ to decide when the time was ripe to end the super loose policy. Most market players now think the end of quantitative easing is a done deal as economists have forecast a 0.4 percent rise in Japan's core consumer price index in January from a year earlier. That would be the highest since early 1998 and provide the latest evidence of the economy pulling free from nearly a decade of deflation. "Press reports are pointing to a BOJ move as early as March, but I think the majority of market participants don't believe that story because such a shift could create volatility before fiscal year-end in March," said Tomoko Fujii, senior currency strategist at Bank of America in Tokyo. "But it's true that the BOJ wants to proceed with this policy shift as soon as possible," she said. The yen's rebound has forced many investors and hedge funds to cover short yen positions quickly, especially those used to fund purchases of higher-yielding currencies, traders said.