FX.co ★ Yen Holds Losses on Dollar Strength

The Japanese yen was trading at approximately 155.5 yen per US dollar on Tuesday, following two consecutive days of decline. This weakness in the yen was driven by robust US economic data and the nomination of a hawkish Federal Reserve leader, which bolstered the dollar. Additionally, the yen was under pressure after Prime Minister Sanae Takaichi remarked over the weekend that a weak yen could present an advantage for export industries, indicating a preference for a more subdued currency. However, she later clarified that her comments were meant to advocate for an economy capable of withstanding currency fluctuations, while Finance Minister Satsuki Katayama explained that the Prime Minister was merely referring to standard economic principles regarding the effects of a weak currency. This depreciation of the yen also comes in the context of the upcoming February 8 lower house election, where Takaichi's ruling party is anticipated to secure additional seats and implement expansionary fiscal policies. Last month, Japanese government bonds and the yen both declined amid expectations of fiscal stimulus, with ongoing discussions about tax cuts likely to place further strain on public finances.