Yen Slips as Dollar Rebounds

The Japanese yen weakened to around 155 per dollar on Tuesday, reversing gains from the previous session as the dollar found support despite ongoing US trade uncertainties. Over the weekend, US President Donald Trump threatened to raise global tariffs from 10% to 15% following a Supreme Court ruling striking down his reciprocal tariffs, and warned of steeper duties on countries that “play games” with existing trade agreements. Tokyo urged Washington to ensure the ruling would not harm Japanese firms and reaffirmed its commitment to the US trade deal. Meanwhile, Japanese media reported that US authorities had proactively conducted rate checks last month to support the yen and were prepared to coordinate intervention at Japan’s request. The reports noted that US Treasury Secretary Scott Bessent led the effort, citing concerns that political uncertainty ahead of Japan’s general election could destabilize markets.

The Japanese yen strengthened toward 154 per dollar on Monday, recouping losses from last week as the dollar after fresh tariff threats from US President Donald Trump undermined confidence in the greenback. Trump announced a 15% global levy after the US Supreme Court rejected his sweeping reciprocal tariffs. The development fueled concerns that trade agreements between the US and its partners could unravel, although senior US officials maintained that existing deals would remain intact. In Japan, Prime Minister Sanae Takaichi moved to calm markets after her expansionary spending agenda unsettled investors, outlining what she described as a “responsible and proactive” fiscal strategy aimed at balancing capital investment with fiscal discipline. She underscored the importance of supporting investment in areas such as economic security, agriculture, energy and healthcare. Trading volumes are expected to stay subdued amid a public holiday in Japan.

The Japanese yen slipped past 155 per dollar on Friday, falling for the third consecutive session as both headline and core inflation rates slowed in January amid government measures to ease cost-of-living pressures. Headline inflation dropped to 1.5% from 2.1%, the lowest since March 2022, while core inflation matched the Bank of Japan’s 2% target, marking the slowest pace in two years. The data gives the central bank more leeway before considering interest rate hikes, particularly amid a lackluster economic rebound last quarter. Meanwhile, Prime Minister Sanae Takaichi is set to open the new parliamentary session with plans to boost strategic investment, pursue “active but responsible” fiscal policies, and advance assertive diplomacy. The yen is on track to decline about 1.6% this week, retracing roughly half of the previous week’s gains following Takaichi’s landslide election victory.