The yen pared gains against the dollar after Bank of Japan Governor Kazuo Ueda kept the possibility of further rate hikes alive but offered few fresh clues on their timing.

The yen broadly held its gains after the Bank of Japan left its benchmark rate unchanged in an 8-1 vote, while signaling underlying inflation had reached its 2% target and opening the door to a December hike. The BOJ also accelerated the pace of ETF sales to about ¥860 billion ($5.5 billion) a year.

Global fund managers are warming to Japan’s bond market again as signs of recovering domestic demand and a more supportive policy backdrop add to the appeal of elevated yields.

The yen is becoming a more effective hedge against an artificial intelligence-driven market shock as changes in Japan’s policy backdrop reduce the risk of the currency weakening sharply when global yields rise, according to Goldman Sachs.

Japanese government bonds extended their recent gains on Friday as a deepening global selloff in technology stocks drove investors into traditional haven assets.

BNP Paribas Asset Management has been raising its positions in long-dated Japanese government bonds, attracted by a steep yield curve and signs that domestic demand is returning to the market.

Japan’s 10-year government bond auction Tuesday saw stronger demand than the 12-month average as elevated yields underpinned buying.

Japan’s two-year government bond auction Wednesday saw stronger demand than the 12-month average as elevated yields underpinned buying.

Japan’s 40-year government bond auction drew its strongest demand in six years as elevated yields lured investors back to the nation’s longest-dated debt, offering a potential reprieve to fragile global markets.

Japan’s two-year government bond yield is closing in on the key 2% threshold as investors ramp up bets on further Bank of Japan rate hikes.

The yen was headed for its best day in almost three weeks as Japanese officials discussed the problems tied to a weak currency in meetings with their US counterparts.

Japanese government bonds fell across the curve, joining a deepening global selloff as the market reopened after the Silver Week holidays.

Yen intervention risk is back in focus with Japan returning from holiday as a two-week long slide in the currency puts it back within reach of the closely watched level of 160 per dollar.

The yen pared declines on Friday, with the Nikkei newspaper reporting that the Bank of Japan inquired with market participants about exchange-rate levels, a step often seen as a precursor to official intervention.

The yen extended losses as Bank of Japan Governor Kazuo Ueda’s comments at a press conference disappointed investors who were looking for a more hawkish tone, strategists said. The BOJ needed to avoid letting prices deviate above target and harming the economy, Ueda said, speaking after the central bank raised its benchmark interest rate by a quarter percentage point to 1.25% in a split vote.

The yen extended its drop against the dollar after Bank of Japan Governor Kazuo Ueda gave mixed signals about future interest-rate hikes, falling short of markets’ hawkish expectations.

The yen’s sharp drop after the Federal Reserve’s hawkish hike is raising the stakes for the Bank of Japan’s policy meeting Friday, with strategists warning the currency could weaken further unless officials convince markets that more tightening is coming.

Japanese government bonds fell after the government was said to be considering a new mid-term defense spending target equivalent to 3.5% of gross domestic product, adding to fiscal concerns and outweighing support from a solid 20-year auction.

Japan’s transformation from sleeping economic giant to magnet for growth and investment is set to face its fastest sequence of interest rate hikes since the bursting of Tokyo’s asset bubble more than a generation ago.

The yen’s recent rally marks the beginning of a broader correction in the currency’s long-running undervaluation, according to Edmond de Rothschild Asset Management.