FX.co ★ Yen Strengthens on Safe-Haven Demand

The Japanese yen strengthened beyond 152 against the dollar on Tuesday, recovering from losses sustained in the previous session. This development comes as changes in trade relations between the United States and China, ahead of a possible meeting between former President Trump and President Xi in South Korea later this month, increased the yen's appeal as a safe-haven currency. Investors are also closely observing Japan’s internal political developments after the Komeito party announced its departure from the ruling coalition with the Liberal Democratic Party. This development raises uncertainties surrounding Sanae Takaichi's policy agenda and may complicate her potential rise to the premiership. Meanwhile, Finance Minister Katsunobu Kato remarked that Japan’s current economic climate is distinct from the Abenomics era of vigorous stimulus measures, emphasizing that inflation has now become the primary focus over deflation. He also warned against abrupt and unilateral currency movements, emphasizing the need for exchange rates to remain steady and reflective of economic fundamentals.