The yen fell on Tuesday to its lowest since July 2024 while the dollar held most of its losses as investors fretted about the Federal Reserve’s independence after the Trump administration opened a criminal investigation into Chair Jerome Powell.
The yen was the main mover in Asia hours, sliding to 158.975 per dollar, its weakest level since July 2024.
That followed news from Kyodo that Japanese Prime Minister Sanae Takaichi had conveyed to a ruling party executive her intention to dissolve parliament’s lower house at the outset of its regular session scheduled to start on January 23.
The Japanese currency had already been under pressure this week after Hirofumi Yoshimura, leader of the Japan Innovation Party, said on Sunday that Takaichi might call an early general election.
“Markets will probably price in a scenario where Takaichi’s coalition will gain more seats in the powerful lower house, and therefore that will enhance her ability to further loosen fiscal policy and potentially monetary policy,” said Carol Kong, a currency strategist at Commonwealth Bank of Australia.
“So that’s the main reason why the yen is selling off right now, on the back of those speculations.”
The yen sank to record lows against the euro and the Swiss franc, while also hitting its weakest level against the British pound since August 2008.
Japan’s Finance Minister Satsuki Katayama had earlier said she and U.S. Treasury Secretary Scott Bessent shared concerns over what she called the yen’s recent “one-sided depreciation”, as Tokyo stepped up threats of intervention to stem the currency’s fall.
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