The yen advanced as much as 1% against the dollar, extending gains after Bank of Japan Governor Kazuo Ueda signaled that interest rates may rise in the coming months.

Japan’s currency strengthened Thursday to a session high of 151.84 against the dollar and held the advance into the close of trading in New York. The yen still lost nearly 6% against the greenback in October, making it the second worst-performing currency among Group-of-10 peers.

Foreign-exchange rates have been impacting price trends in Japan, and policymakers will raise rates if their outlook is realized, Ueda said at a press conference after the BOJ stood pat on interest rates. The governor also said that uncertainty in the US economy is clearing somewhat.

“Ueda’s comments opens a rate hike possibility that will support the yen,” said Chong Hoon Park, an economist at Standard Chartered Bank. “We see the BOJ hiking again in the January 2025 meeting, given the prevailing political uncertainty at home.”

The currency has erased its losses since sliding to a three-month low on Monday after Japan’s ruling coalition lost its majority. The weakness fueled speculation the central bank may face increased pressure to raise rates sooner rather than later to stem the weakness.

“We had a perfect alignment for the yen move today,” said Paresh Upadhyaya, director of fixed income and currency strategy at Amundi, US, adding that a weakening dollar “added fuel to the fire.”

The BOJ governor also said that a phrase referencing time to spare was linked to downside risk to the US economy and will probably no longer be used, but that new concerns may emerge depending on who becomes the US president.

Shoki Omori, chief desk strategist at Mizuho Securities in Tokyo, said there’s room for USD/JPY to rise if US data including nonfarm payrolls on Friday comes out strong, with 155 “a level to watch for investors and policymakers.”