The Japanese yen weakened to a five-month low against the U.S. dollar, reaching 158.09 yen per dollar in New York trading on December 26, the lowest level since July. This depreciation was driven by the widening interest rate differential between Japan and the U.S., with the U.S. dollar gaining on expectations of robust U.S. economic growth and inflation. Meanwhile, the Bank of Japan (BOJ) maintained its interest rate at 0.25% at its December meeting, with Governor Kazuo Ueda emphasizing the need to monitor wage trends and the incoming U.S. administration's economic policies before considering a rate hike. Despite some BOJ policymakers suggesting conditions for an imminent rate hike, the majority advocated for caution, keeping the possibility of a January rate hike open. Inflation in Tokyo has accelerated, supporting the prospects of a rate hike. Japan's Finance Minister Shunichi Kato expressed concern over the yen's depreciation and indicated readiness to take appropriate action against excessive currency movements, which he attributed to speculative activities. The BOJ's December summary raised expectations of a January rate hike.