The yen surged to its highest level in over two months on Monday, fuelled by growing speculation that coordinated intervention from US and Japanese authorities may be imminent. Investors are also reportedly reducing their dollar holdings in anticipation of the upcoming Federal Reserve meeting and a potential announcement from the Trump administration regarding a new central bank chair.
The Japanese yen rose as much as 1.2 per cent to 153.89 per dollar, marking its strongest position since November. Conversely, the Australian dollar experienced a 1.3 per cent decline against the yen, despite having reached an 18-month peak of 108.95 yen earlier on Monday.
The yen has faced sustained pressure, partly stemming from concerns surrounding Japan’s substantial government debt, which exceeds twice the nation’s economic output. A recent surge in market interest rates has heightened anxieties about Japan’s capacity to manage its debt obligations. Adding to the financial landscape, Japanese Prime Minister Sanae Takaichi has pledged to implement tax cuts as part of her campaign for a snap election scheduled for February 8.
