The Japanese yen surged more than 1.7% against the dollar on Thursday amid growing speculation that the Bank of Japan is preparing to raise interest rates, pushing the currency to its highest level in a month. The move follows remarks from BoJ policymaker Hajime Takata suggesting the bank needs to act more "nimbly", which markets interpreted as a sign of an imminent, decisive rate rise. The jump comes amid broader jitteriness in global markets following a sharp sell-off in government bonds this week, driven by fears of renewed inflation linked to higher oil prices.

The yen reached 155.85 against the dollar, having already climbed 0.9% the previous day, with markets now pricing in a 77% chance of a rate rise at the BoJ's meeting starting on 17 September, having held rates at 1% in July. Japan's vice-finance minister Atsushi Mimura said officials remained on "heightened alert", while analysts noted the scale of the currency's swing reflected fragile market sentiment. The wider bond turmoil, which pushed UK 10-year gilt yields close to 5.3% – their highest since 2008 – before easing to around 5.1%, was fuelled by a hawkish speech from US Federal Reserve chair Kevin Warsh warning of further action if inflation fails to return to target.