FX.co ★ Japanese Yen Nears Key 160 Level

The Japanese yen dipped beyond 159 per dollar on Wednesday, marking its lowest point since July 2024 and nearing the crucial psychological level of 160—a threshold that previously prompted intervention from local authorities. This depreciation is influenced by speculation that Prime Minister Sanae Takaichi might announce a snap election next month to consolidate her power and promote expansionary fiscal policies, with reports suggesting that lower house elections might take place on February 8. On the economic battleground, a private survey revealed a deceleration in manufacturing activity, attributed to trade tensions, while the service sector is grappling with tourism-related interruptions. These factors constrain the Bank of Japan's capacity to implement interest rate increases. Additionally, Finance Minister Satsuki Katayama noted earlier this week that she and US Treasury Secretary Scott Bessent expressed concerns about the yen's "one-sided depreciation" during bilateral discussions held alongside a multilateral finance ministers' meeting.