Treasury Secretary Scott Bessent's bet on the yen is paying off so far.

The Japanese currency touched an almost seven-month high against the U.S. dollar in Asia on Tuesday, a sharp turnaround from July when the U.S. and Japan jointly intervened in the foreign-exchange market to curb the yen's seemingly inexorable slide.

Driving the rally are mounting expectations that the Bank of Japan will raise interest rates at a policy meeting next week. Investors are also weighing the possibility that officials could signal a speedier pace of tightening ahead, after one rate-setter said inflation was at risk of running ahead of the bank's 2% goal.

The yen on Tuesday was up about 0.4% against both the dollar and the euro and since the start of August has gained around 4% against the two currencies. The dollar fell as low as 152.87 yen in the Asian session, the lowest intraday level since Feb. 17, LSEG data showed.

A dollar on Tuesday bought 153.76 yen, compared with close to the 164.00 yen level in late-July. That was the yen's weakest level for 40 years.

A euro bought 178.71 yen, compared with a July high of more than 187.00 yen. Bessent sold euros from U.S. foreign-exchange coffers to buy yen when Washington joined Japan in an effort to strengthen the currency. That was the first joint intervention to purchase the yen since the Asian financial crisis in the late 1990s.

Bessent said soon afterward that the U.S. acted to lessen the risk the yen's weakness spilled over to other currencies in Asia, which could hurt U.S. exporters and the broader economy.

He also expressed concern that a sliding yen risked pushing up U.S. interest rates if it meant the Japanese authorities sold Treasurys to finance yen purchases to prop up their currency.

Investors remain on edge over the possibility of further intervention. Japan's Finance Minister Satsuki Katayama said Tuesday the country would continue to coordinate with the U.S. to ensure market stability.

"We will maintain close communication with the U.S. Treasury and work to preserve order in the foreign-exchange market," Katayama said at a news conference. "Our policy stance has not changed at all since we conducted joint currency intervention with the U.S."

Expectations for a quicker pace of Bank of Japan rate increases have mounted since last Wednesday, when BOJ policy board member Hajime Takata said the central bank's 2% inflation target had nearly been achieved and that the risk of prices overheating was rising.

"Sentiment toward the yen has shifted materially over the past week," said Samara Hammoud, international economist and currency strategist at Commonwealth Bank of Australia.

Also supporting the yen is the possibility of Japanese investors bringing cash back to Japan, lured in particular by rising yields on Japanese government bonds.

Japan's Government Pension Investment Fund, for instance, one of the world's largest pension funds by assets, has around $2.1 trillion in assets, with about half invested in overseas bonds and equities. Katayama has floated the possibility the fund could rejigger its asset mix to invest more domestically.