The Japanese yen strengthened toward 157 per dollar on Friday, extending gains for a third consecutive session after the Bank of Japan kept its policy rate at 1.25%, in line with market expectations. The central bank signaled that underlying inflation has finally reached its 2% target, potentially paving the way for a rate hike in December. The decision was reached by an 8-1 vote, with board member Hajime Taka dissenting in favor of raising rates to 1.5%, arguing that conditions have entered a new phase that warrants a faster move toward a neutral interest rate. Meanwhile, the yen received additional support from safe-haven demand as disappointing earnings from major technology companies revived concerns over AI-related investments and triggered another equity selloff. Furthermore, global asset managers have begun returning to Japan’s bond market as improving domestic demand and a more favorable monetary policy outlook increase the attractiveness of relatively higher yields.