The yen rose to 152, while the market was wary of a weakening dollar

On January 27th, in the New York foreign exchange market, the yen appreciated against the dollar to a range of 152.0-152.5 yen per dollar. The yen’s appreciation accelerated as US President Trump expressed no concern about a weakening dollar. The dollar index, which reflects the overall strength of the dollar, fell to its lowest level in about four years. Among investors, concerns about both the yen’s appreciation and the dollar’s depreciation intensified.

Statements from Japanese and US officials triggered significant exchange rate volatility.

On January 27th, Japanese Finance Minister Satsuki Katayama stated, “If necessary, we will cooperate closely with US authorities to take appropriate countermeasures.” The market again became aware of potential foreign exchange intervention by Japanese and US financial authorities, causing the yen to appreciate in the Japanese market to a range of 152.5-152.9 yen per dollar, reaching a new high in about three months since November 7th, 2025.

The yen’s appreciation against the dollar intensified after trading shifted to the New York market. When asked by reporters on the 27th if he was worried about the rapid depreciation of the dollar, Trump replied, “No, Great.” He also stated, “I want the dollar to stabilize at a fair level, a level consistent with its value.” Following this statement, the dollar approached 152.10 yen for the first time since late October of last year.

Among overseas investors, vigilance regarding both the appreciation of the yen and the depreciation of the dollar is increasing. The dollar depreciated against the euro to around 1.1972 dollars per euro, a new low since June 2021. The dollar also fell against the Swiss franc to around 0.76 francs per dollar, marking the first time since 2015 that the dollar has depreciated while the franc has appreciated.

As the dollar was sold off against multiple currencies, the dollar index fell to the 96 range, its lowest level since February 2022.

Global investors are hedging against dollar risks.

The fundamental reason for the dollar’s weakness is the US interest rate cut and unease about the political and economic outlook. In addition to increasing pressure on the Federal Reserve (FRB) to cut interest rates, the Trump administration has made no secret of its intervention in the Fed’s operations, which should maintain independence. Geopolitical risks, coupled with tariff issues, have led to a continued depreciation of the dollar.

Global institutional investors are already showing signs of hedging against the risk of dollar depreciation. A January survey of approximately 200 fund managers worldwide by Bank of America, a major US banking firm, revealed that the largest trades are currently “long positions in gold” and “long positions in large-cap technology stocks,” followed by “short positions in the dollar.”

It is reported that the Australian Superannuation Trust (ART), a large Australian pension fund, is increasing its foreign exchange hedging of dollar assets in response to the weakening dollar. The pension fund explained, “Due to expectations of a US interest rate cut, the dollar will weaken this year.”

Beware of a reversal in yen carry trades

Some analysts believe that, given the current appreciation of the yen against the dollar, the Japanese and US governments share a common goal in curbing financial market volatility. However, some market participants believe that “there is a high probability that the US government intentionally induces a depreciation of the dollar” (Carl Shamotta, Chief Market Strategist at Corpay, a US settlement services company).

Trump and US Treasury Secretary Bessant, among others, have consistently argued that the overvaluation of the dollar has placed a huge burden on US businesses. Some investors also believe that a weaker dollar is beneficial to the fundamentals of the US economy, thus predicting a long-term downward trend for the dollar.

Many are also concerned about the impact on the entire financial market. Lauren Goodwin, an economist at New York Life Investments, expressed concern about the reverse operation of “yen carry trades”—borrowing low-interest yen to buy high-interest dollar assets.

Goodwin warned: “(The appreciation of the yen against the dollar leads to a decrease in asset value when converted to foreign exchange) If leverage in the foreign exchange, interest rate, and stock markets all decreases simultaneously, it will push up yields in global financial markets and damage liquidity.”