Ahmed Kamel – Egypt Daily News
The U.S. dollar weakened sharply in Asian trading on Monday amid speculation that American officials could coordinate with Japan to support the yen following its recent sell-off. Reports that the Federal Reserve Bank of New York had consulted traders about the yen’s exchange rate fueled demand for the Japanese currency, pushing it up more than 1 percent to 153.89 per dollar, its strongest level since November.
The yen’s recent decline had been driven by concerns over Japan’s fiscal position, the central bank’s reluctance to raise interest rates further, and expectations that the Federal Reserve would hold off on cutting borrowing costs. The prospect of coordinated intervention by U.S. and Japanese authorities prompted the dollar to retreat broadly, boosting the euro, pound, and South Korean won, while the Singapore dollar reached an 11-year high.
Safe-haven assets surged as a result. Gold climbed nearly 2 percent, breaking $5,000 per ounce for the first time, while silver rose above $109. Analysts noted that geopolitical tensions, including Trump’s actions in Venezuela and warnings to Iran, combined with inflationary pressures and central bank demand, have driven investors toward precious metals.
Japanese officials signaled a readiness to act if market volatility persists. Atsushi Mimura, a senior currency official, said Tokyo would “respond appropriately against FX moves, working closely with U.S. authorities as needed,” echoing a joint statement by Japanese and U.S. finance ministers. Prime Minister Sanae Takaichi also warned that the government would take “all necessary measures to address speculative and highly abnormal movements.”
Market strategists highlighted the heightened volatility surrounding the dollar-yen pairing. Stephen Innes of SPI Asset Management commented that early Asian trading showed the dollar pushed lower by intervention chatter, while Lloyd Chan at MUFG said the balance of risks now points to greater two-way volatility amid uncertainty over Japan’s fiscal policy and central bank stance.
Equity markets responded to the stronger yen and cautious dollar, with Tokyo’s Nikkei 225 dropping 1.8 percent, Hong Kong and Shanghai seeing modest declines, and Singapore, Seoul, Manila, and Bangkok also retreating. Taipei and Wellington posted gains. Oil prices extended Friday’s rally, with West Texas Intermediate crude rising to $61.34 per barrel and Brent crude reaching $66.18. Analysts linked the gains to geopolitical concerns, particularly U.S. military movements toward the Gulf and tensions with Iran.
Investors are also closely watching the Federal Reserve’s upcoming policy meeting, expected to leave interest rates unchanged after recent cuts. Economists note that while no major policy changes are anticipated, market reactions could be sensitive to dovish signals or comments on inflation and employment targets.
At 0700 GMT, key figures included:
- Dollar/yen: 154.17, down from 157.00 on Friday
- Euro/dollar: $1.1859, up from $1.1823
- Pound/dollar: $1.3664, up from $1.3636
- Nikkei 225: 52,885.25, down 1.8 percent
- Hang Seng Index: 26,706.02, down 0.2 percent
- Shanghai Composite: 4,132.61, down 0.1 percent
- West Texas Intermediate: $61.34 per barrel, up 0.4 percent
- Brent Crude: $66.18 per barrel, up 0.5 percent
- Dow Jones: 49,098.71, down 0.6 percent
- FTSE 100: 10,143.44, down 0.1 percent
The combination of central bank intervention signals, geopolitical uncertainty, and safe-haven demand continues to drive market volatility, leaving investors alert to shifts in both currencies and commodities.
