Japanese yen hits over six-month high on US asset selloff

The Japanese yen strengthened past 143 against the U.S. dollar, reaching its highest level since late September 2024, as escalating trade tensions between Washington and Beijing sparked broad dollar weakness and fueled demand for safe-haven assets.

Japanese yen hits over six-month high on US asset selloff

The yen, often seen as a refuge in times of global uncertainty, benefited from this risk-off sentiment as investors sought stability amidst the rising geopolitical risks. A concurrent selloff in U.S. Treasuries—typically considered a hedge against uncertainty—further bolstered yen gains, as the combination of a weakening dollar and retreating Treasury prices signaled an increasing preference for alternative safe-haven currencies like the yen. On Friday, China’s finance ministry announced additional tariffs of 125% on U.S. goods in retaliation for President Trump’s decision a day earlier to raise duties on Chinese imports to 145%. This sharp escalation in the trade war added to the prevailing sense of instability in global markets, prompting investors to pull back from riskier assets. In a forceful response, Beijing warned that if the U.S. continues to infringe on China’s core interests, it will “resolutely take countermeasures and fight to the end.” The rhetoric from both sides further stoked fears of a prolonged and intensified trade conflict, which could have far-reaching implications for global economic growth and trade dynamics.

Markets monitor trade war developments

Meanwhile, markets are also closely monitoring ongoing U.S.-Japan trade talks, as Tokyo pushes for more favorable terms in negotiations to reduce the current 10% tariff rate on Japanese exports to the U.S. These talks are particularly significant as Japan seeks to protect its key export sectors from the global trade turmoil, especially in industries like automobiles and technology, where U.S. tariffs have already had a noticeable impact. The outcome of these negotiations could influence the yen’s performance further, as a successful deal could reduce the risks for the Japanese economy and potentially diminish the yen’s safe-haven appeal. However, as the U.S.-China trade war continues to unfold, the yen’s status as a safe-haven asset is likely to remain a key factor in its performance against the dollar in the near term.