How does an increase in interest rates by the Bank of Japan typically affect the value of the Yen in the foreign exchange market?

When the Bank of Japan raises interest rates, it usually makes Japanese investments more attractive to investors because they can earn more money from them. This increased demand for Japanese assets means that more people will want to buy yen to invest, which can lead to an increase in the value of the yen in the foreign exchange market. For example, if an investor in the United States sees that the interest rates in Japan are higher, they might exchange their dollars for yen to take advantage of the better returns. As more investors buy yen, the supply of yen goes down, and its value goes up compared to other currencies. Therefore, higher interest rates tend to strengthen the yen against other currencies in the market.