The yen led currencies higher versus the dollar, reaching its strongest level since the start of the year as investors reacted to comments from a Bank of Japan board member and to the U.S. presidential debate.

The Japanese currency rallied more than 1% to ¥140.91 against the greenback after board member Junko Nakagawa indicated that the BOJ will continue to adjust policy going forward provided the economy performs in line with projections.

The dollar also fell versus most of its Group of 10 peers and Asian currencies including the Philippine peso and Indonesian rupiah. The moves coincided with the first presidential debate between U.S. Democrat Kamala Harris and Republican Donald Trump.

"The yen was the main trigger” for Asian currencies trading higher, said Christopher Wong, currency strategist at Oversea-Chinese Banking. "Gains in Asian currencies can continue as long as global growth continues to trudge along the lines of not-hot-not-cold.”

The yen’s advance weighed on Japan’s exporter-heavy stock market, with the benchmark gauges headed for their lowest levels in a month. With betting odds improving for Harris over Trump, U.S. equity futures weakened slightly and Treasury futures rose. Bitcoin also slipped after the debate and Taylor Swift’s endorsement of Harris.

"Harris definitely did better than expected according to the betting market,” Marko Papic, chief strategist at BCA Research, said by phone. "But it’s unlikely to be seen as a definite victory for her. It’s difficult for the market to really price in any significant political changes.”

While most BOJ-watchers expect the central bank to hold interest rates steady at its meeting next week, Nakagawa’s comments serve as a reminder that rate hikes are still in the pipeline should the economy and prices continue in line with forecasts.

Nakagawa’s comments that appeared to be positive about normalizing monetary policy may have triggered losses in dollar-buying positions betting on U.S. consumer price index and a 25 basis point rate cut in September, according to Hiroyuki Machida, director of Japan foreign exchange & commodities sales at ANZ Group Holdings.

The yen has been in a broad appreciation trend since hitting a multi-decade low of ¥161.95 on July 3. Much of the turnaround has been driven by market expectations that the interest rate differential between the United States and Japan will narrow further this year.

Nakagawa’s comments underpin the BOJ’s message that it will raise rates further if conditions are right, a stance signaled recently by board members including Gov. Kazuo Ueda.

Most economists expect the BOJ to hold policy steady when the board concludes its next meeting on Sept. 20, with many expecting authorities to wait until December or January before making its next move.