Yen extends rally as Japanese PM's market warning raises intervention risk

The yen extended its gain on Jan 26 as traders started the week on heightened alert for Japan intervening in the market following the currency's recent slide.

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The yen has rallied almost 3 per cent over two trading days, the biggest gain since April 2023 when markets were in turmoil following US President Donald Trump's tariff onslaught.

(PHOTO: REUTERS)

The currency rose as much as 1.2 per cent to 153.81 per US dollar, the strongest since mid-November, following a warning to the market by Prime Minister Sanae Takaichi. That came on the back of signs on Jan 23 that the United States may join Japan to defend the yen.

Against the Singapore dollar, the yen rose 0.9 per cent to 121.333 as at 4.12pm.

Japan will closely coordinate with the US and act in accordance with their joint finance ministers' agreement in September 2025, Chief Cabinet Secretary Minoru Kihara said at a regular briefing on Jan 26. His comments echo those of Mr Atsushi Mimura, the Finance Ministry's top foreign exchange (FX) official, who said Japan is keeping close contact with the US. Both officials declined to comment on talk of rate checks.

"This is shaping up as a controlled, policy-engineered reset," said Mr Masahiko Loo, a senior fixed-income strategist at State Street Investment Management.