Dollar Slips in Asia as Japan-US Yen Support Speculation Lifts Markets
The US dollar weakened in Asian trading on Monday following reports that American and Japanese officials may be coordinating efforts to stabilise the yen after its recent sharp decline.
The speculation sparked a surge in the Japanese currency and sent ripples across global financial markets.
According to market sources cited by Bloomberg, the Federal Reserve Bank of New York had contacted traders to discuss the yen’s exchange rate.
The report prompted the yen to rise by more than one percent to 153.89 per dollar, marking its strongest level since November.
The yen had been under pressure in recent weeks due to concerns over Japan’s public finances, the Bank of Japan’s decision to avoid further interest rate hikes, and expectations that the US Federal Reserve will keep borrowing costs unchanged at its meeting this week.
Japanese authorities last intervened in currency markets in 2024 when the yen slid to 160 against the dollar.
Speculation of fresh intervention pushed the dollar lower against major currencies.
The euro, British pound, South Korean won and Singapore dollar all gained, with the Singapore currency reaching its highest level in 11 years.
Gold prices surged alongside the weaker dollar, climbing more than two percent to break above $5,000 an ounce for the first time. Silver also extended its rally, rising beyond $109 per ounce after crossing the $100 mark last week.
Japanese officials added to expectations of market action. Currency chief Atsushi Mimura said Japan would respond appropriately to foreign exchange volatility and would work closely with US authorities when necessary.
His comments followed a warning from Prime Minister Sanae Takaichi, who pledged to counter what she described as abnormal and speculative currency movements.
Market analysts said intervention fears are now limiting further yen weakness. Stephen Innes of SPI Asset Management noted that early trading in Asia saw the dollar retreat as talk of rate checks and official warnings from Tokyo unsettled currency markets.
MUFG strategist Lloyd Chan said investors should expect increased volatility in the dollar-yen pair as markets weigh possible intervention and shifting policy expectations from the Bank of Japan and Japan’s new fiscal leadership.
Safe-haven demand continued to drive precious metals higher, supported by geopolitical tensions, strong central bank gold purchases, persistent inflation concerns and uncertainty surrounding a potential US government shutdown.
Analysts at Forex.com said gold’s recent movements reflect sustained demand for protection as confidence in the dollar and bond markets wavers.
Attention now turns to the Federal Reserve’s policy meeting this week. Bank of America economists said the Fed is expected to keep rates unchanged but noted that political questions may dominate Chair Jerome Powell’s press briefing, with market pricing leaving room for a potential dovish surprise.
Equity markets in Asia posted mixed results. Tokyo stocks fell 1.8 percent as the stronger yen hurt exporters, while markets in Shanghai, Singapore, Seoul, Manila and Bangkok also declined. Hong Kong, Taipei and Wellington recorded gains. European markets opened unevenly, with London rising, Paris dipping and Frankfurt flat.
Oil prices extended gains from Friday after President Donald Trump announced that a US naval force was moving toward the Gulf and warned that Washington was closely monitoring Iran.
Trump has repeatedly suggested the possibility of military action against Tehran following recent escalations involving Israel and Iran.
