Asian currencies hit highs as US seen backing Japan yen action
Asian currencies surge as the dollar drops and markets speculate the US may join Japan in coordinated FX intervention, lifting the yen, SGD, ringgit and won.
Bloomberg reported a major move in Asia’s currency markets on Monday morning (Jan 26), as key regional currencies strengthened sharply against the US dollar. The main trigger was speculation that Japanese and US authorities may be preparing to coordinate a systematic market intervention to curb yen weakness.
At the same time, investors were watching the dollar amid the prospect of US involvement in supporting the yen—something that could hurt confidence in the dollar and prompt selling. The Bloomberg Dollar Index fell 0.4%, extending last week’s decline of more than 1.6%, as funds rotated into other targets and lifted Asian currencies.
- The yen strengthened by 1% to a two-month high of 154.22 per dollar.
- The Singapore dollar rose to its strongest level in more than 11 years, since 2014, at 1.2678 per dollar.
- The Malaysian ringgit climbed to a seven-year high, since 2018, to 3.9678 per dollar, benefiting from momentum in AI and data-centre growth.
- The South Korean won rose more than 1%, supported by sentiment after earlier comments from US Treasury Secretary Scott Bessent backing the won.
History of US–Japan cooperation on yen intervention
Global investors are closely watching signals that Japan and the US may intervene in foreign exchange markets to support the yen. Reports said the New York Fed has begun asking financial institutions about yen exchange rates, which the market views as “laying the groundwork” ahead of possible action.
Analysts said this could align with an approach favouring a “weaker dollar”, associated with Donald Trump, and if it materialises it would be a clear signal that the US wants a softer dollar to boost export competitiveness against China and Japan.
Gareth Berry, an analyst at Macquarie Group, said: if the New York Fed decides to join an intervention, it would not be merely symbolic—Japan holds substantial dollars, but the Fed has unlimited dollar capacity.
Such coordinated interventions have occurred before, including the 1985 Plaza Accord and again in 1998, both of which had significant impacts on global currency structures.
Amid the uncertainty, investors also shifted into safe-haven assets such as gold, sending prices above $5,000 per ounce for the first time, reflecting concerns over geopolitical risks and the depreciation of major currencies.
