The yen firmed to as much as 155.25 per dollar in morning trade, just below the 155.20 high it hit last ​month after the July intervention

The yen clung to its gains, and was on track for its strongest week in more than a month, as traders ramped up bets on a Bank of Japan interest rate hike.

The yen firmed to as much as 155.25 per dollar in morning trade, just below the 155.20 high it hit last ​month after the July intervention. It later eased and was last flat at 155.71.

The yen is now ​heading for a 2.5% gain this week, its biggest weekly gain since late July, when ⁠authorities conducted an intervention to halt a relentless decline in the Japanese currency.

With no clear ​evidence of official action, analysts say the sudden jump in the yen reflects bets the Bank of Japan could be ​more hawkish than previously expected when it meets on September 17 to 18.

This feels less like a short squeeze and more like the market cautiously reassessing a more hawkish BOJ path, said Masahiko Loo, senior fixed income strategist at State Street Investment Management in Tokyo.

Markets are finally ​starting to buy into the idea that Japan may continue normalising policy into 2027, Loo said.

Meanwhile, Japan’s top currency diplomat Atsushi ​Mimura said on Friday he remained alert to exchange-rate moves, keeping markets alert to the chance ⁠of another yen-buying intervention.

In other currencies, the New Zealand dollar was up 0.2% at $0.5892 after the central ​bank lifted the cash rate by 25 basis points to 2.75% on Wednesday and signalled more tightening ahead. The Australian dollar rose 0.1% at $0.7206.