The Yen declined on Tuesday to its weakest level since July 2024, while the Dollar recouped little of its earlier losses as investors grew concerned about the Federal Reserve’s independence following the Trump administration’s launch of a criminal investigation into Fed Chair Jerome Powell.
During Asian trading hours, the Yen led currency moves, sliding to 158.975 per Dollar, its lowest level since July last year.
The decline came after Kyodo news agency reported that Japanese Prime Minister Sanae Takaichi had informed a ruling party executive of her plan to dissolve the lower house of parliament at the start of its regular session on 23rd January.
The Japanese currency was already facing downward pressure earlier this week after Hirofumi Yoshimura, head of the Japan Innovation Party, said on Sunday that Takaichi could call a snap 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 Commonwealth Bank of Australia currency strategist.
“So that’s the main reason why the Yen is selling off right now, on the back of those speculations.”
The Yen also slid to record lows against the Euro and the Swiss Franc, and also fell to its weakest level versus the British Pound since August 2008, Reuters reports.
Earlier, Japan’s Finance Minister Satsuki Katayama said she and US Treasury Secretary Scott Bessent shared concerns about what she described as the Yen’s recent “one-sided depreciation,” as Tokyo intensified warnings of possible intervention to curb the currency’s decline.
Elsewhere, the Euro slipped 0.08% to $1.1657 after climbing as much as 0.5% in the prior session, while Sterling rose 0.07% to $1.3475, building on Monday’s 0.47% advance.
In addition, the Swiss Franc, which had benefited from safe-haven demand, was steady at 0.7976 per Dollar, while the Dollar index edged up to 99.01 after posting its worst session in three weeks a day earlier.