The Japanese yen briefly rose against the US dollar, falling below 150 yen per dollar, recovering from its lowest level in eight months, after non-performing loans at two US banks led to a surge in global demand for safe-haven assets. The Japanese currency outperformed most of its Group of Ten (G10) peers on Friday, rising about 0.4% to 149.90 yen against the dollar, its highest level since Oct. 6, and the yen traded against the dollar at 150.10 at 1:10 p.m. in Tokyo. The Swiss franc also rose, while the dollar and US Treasury bond yields fell amid heavy selling in regional bank stocks. Political uncertainty dampens interest rate hike expectations The yen hit its lowest level since February a week ago after Sanae Takaishi won the position of head of the Liberal Democratic Party, then saw sharp swings following the sudden collapse of Japan’s ruling coalition. Also read: The big bet against the dollar is turning into a painful deal for investors. Christopher Wong, currency strategist at Oversea-Chinese Banking, said: “The dollar continued to decline against the yen, tracking the fall in US Treasury bond yields amid a state of risk aversion. Attention is also focused on the formation of a governing coalition.” “In Japan, especially if the LDP and the Japan Innovation Party can reach an agreement.” Political uncertainty has dampened expectations that the Bank of Japan will raise interest rates this month. However, central bank governor Kazuo Ueda told reporters in Washington on Thursday that the bank would continue monetary tightening if confidence in the achievement of its economic forecasts strengthened, leaving the door open to raising interest rates in the near term. Bloomberg Strategists’ Opinion: Mark Cranfield, a strategist at Markets Live, believes that foreign exchange traders will note when they recall the memories of 2023 that the dollar fell 800 points from peak to trough during the regional bank collapse crisis, and the occurrence of a similar event this time would signal a drop in the dollar’s rate against this month’s rate. yen against the dollar. Again, the main driver is a decline in Treasury yields, with two-year bond yields falling to levels not seen in three years. There is plenty of room for the decline to exceed expectations, with traders expecting the US Federal Reserve’s interest rate target to reach the 3% range.
The yen strengthens against the dollar amid demand for safe havens
