Yen Crashes to 18-Month Low: Intervention Fears Mount Amid Japan's Fiscal Woes

• The Japanese yen hit an 18-month low, weakening to 159.45 per dollar, sparking fears of currency intervention by Tokyo authorities.
• Weak demand for Japanese government bonds and speculation of a snap election under Prime Minister Sanae Takaichi, potentially leading to aggressive fiscal stimulus, are compounding the yen's slide.
• The currency has lost approximately 3 percent against the dollar in two months, reminiscent of previous interventions in April and July 2024.
• Finance Minister Satsuki Katayama issued a verbal warning, stating officials would take "appropriate action against excessive foreign exchange moves," temporarily impacting the dollar-yen rate.
• The U.S. dollar remains strong due to inflation data aligning with expectations, reinforcing bets that the Federal Reserve will maintain interest rates, further pressuring the yen.

Why It Matters: Japan's yen plunges to an 18-month low, fueling intervention speculation amid fiscal concerns and political uncertainty.