Tokyo/Abuja/New York – The U.S. dollar fell sharply in early Asian trading on Monday amid speculation that U.S. and Japanese authorities could intervene to support the yen following a recent sell-off. Equities started the week on a mixed note, reflecting uncertainty ahead of the Federal Reserve’s policy meeting.
Reports that the Federal Reserve Bank of New York had contacted traders about the yen’s exchange rate triggered a surge in the Japanese currency, which jumped more than one percent to 153.89 per dollar — its strongest level since November.
The yen’s weakness has been driven by concerns over Japan’s fiscal position, the Bank of Japan’s reluctance to raise interest rates, and expectations that the U.S. Federal Reserve will hold off on cutting rates this week. The last time Japanese authorities intervened in the currency market was in 2024 when the yen hit 160 against the dollar.
“The early Asia session saw the dollar pushed lower as intervention rumors swirled, and Tokyo’s remarks reminded the market that yen weakness is no longer a free carry,” said Stephen Innes of SPI Asset Management.
Japanese officials, including top currency chief Atsushi Mimura, indicated the country will act to curb “speculative and highly abnormal” movements in the foreign exchange market. Prime Minister Sanae Takaichi echoed the warning, pledging all necessary measures to stabilize the currency.
The dollar’s retreat also lifted other currencies and safe-haven assets. The euro, pound, and South Korean won strengthened, while the Singapore dollar reached an 11-year high. Gold surged past $5,000 per ounce, peaking at $5,111.07, while silver climbed above $109. Analysts say the rally reflects ongoing concerns about global geopolitical tensions, inflation, and a possible U.S. government shutdown.
“Gold’s recent movements are classic safe-haven behavior,” said Fawad Razaqzada, market analyst at Forex.com. “Confidence in the dollar and bonds looks a bit shaky, keeping investors cautious.”
Equity markets struggled amid currency volatility. Tokyo’s Nikkei 225 fell 1.8 percent as the stronger yen weighed on exporters, while Shanghai, Singapore, Seoul, Manila, and Bangkok also retreated. Hong Kong, Taipei, and Wellington posted gains, and London opened slightly higher.
Oil prices extended Friday’s gains of nearly three percent after former U.S. President Donald Trump signaled increased military focus on the Gulf and Iran, heightening geopolitical uncertainty.
Key Exchange Rates (Monday, 0815 GMT)
- Dollar/Yen: 154.20 ↓ from 157.00
- Euro/Dollar: $1.1845 ↑ from $1.1823
- Pound/Dollar: $1.3650 ↑ from $1.3636
Key Market Indices & Commodities
- Nikkei 225 (Tokyo): 52,885.25 ↓1.8%
- Hang Seng Index (Hong Kong): 26,765.52 ↑0.1%
- Shanghai Composite: 4,132.61 ↓0.1%
- FTSE 100 (London): 10,162.02 ↑0.2%
- WTI Crude: $61.11 ↑0.1%
- Brent Crude: $65.93 ↑0.1%
The markets will remain closely watched this week as traders anticipate the Fed’s meeting and weigh the possibility of coordinated currency interventions.
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