TOKYO, March 26 (Reuters) - Japan is weighing a controversial plan to arrest the yen's slide: stepping into oil futures markets, sources say, as long-standing policy tools lose traction against stubborn inflation pressures. Details of the proposal remain scant, after Reuters reported on Monday that it was under discussion, but the idea underscores Tokyo's mounting frustration. Policymakers increasingly ‌see speculative surges in energy prices as a major driver of the yen's weakness against the dollar - an ...

By Makiko Yamazaki and Takaya Yamaguchi TOKYO, March 13 (Reuters) - Japan likely has less scope to intervene in the currency market than it did in the past, even as the Middle East conflict pushes the yen back towards the key 160-per-dollar line once considered the trigger threshold ‌for authorities to act. The recent reluctance by officials to talk up the currency could nudge the yen as low as 165 to the dollar, some ‌analysts say, a move that would fan import costs and broader inflation at a time the ...

Currency intervention will not cut the risk of financial turmoil emanating from Japan. And in America fear of the trade deficit should not drive policy https://t.co/JD8uALVP4F ...

Currency intervention will not cut the risk of financial turmoil emanating from Japan. And in America fear of the trade deficit should not drive policy: https://t.co/0t2AyUv12b https://t.co/CSPqu6vpoL ...

The Japanese and American governments are reportedly considering propping up the yen. Yet currency intervention is a distraction. It will not cut the risk of financial turmoil emanating from Japan https://t.co/JD8uALVP4F ...

Core Viewpoint - The US dollar is experiencing significant pressure due to political uncertainty, potential currency interventions, and economic factors, leading to a decline in its value against other currencies, particularly the yen. Group 1: Currency Market Dynamics - The dollar is under pressure from speculation that the US may coordinate with Japan for FX intervention to support the yen, which aligns with President Trump's view that a weak dollar benefits US exports [1] - The dollar fell to a nearly 4-year low as President Trump expressed comfort with its weakness, while foreign investors are withdrawing capital due to political risks [3] - The dollar index rose by +0.29% after Treasury Secretary Bessent stated the US would not intervene in the currency market, indicating a temporary rebound [6] Group 2: Political and Economic Influences - Political uncertainty is affecting the dollar, particularly after President Trump threatened 100% tariffs on imports from Canada if a trade agreement with China is signed [2] - The risk of a partial US government shutdown is also weighing on the dollar, with Senate Democrats threatening to block funding deals [7] - The Federal Reserve's decision to keep interest rates unchanged reflects a solid pace of economic activity, but job gains remain low, contributing to the dollar's weakness [5] Group 3: Precious Metals Market - Precious metals, particularly gold and silver, are gaining traction as safe-haven assets amid US political uncertainty and large deficits, with gold reaching a record high of $5,323.40 an ounce [13] - Central bank demand for gold is strong, with China's PBOC increasing its reserves for the fourteenth consecutive month, and global central banks purchasing 220 MT of gold in Q3, up +28% from Q2 [15] - Fund demand for precious metals remains robust, with long holdings in gold and silver ETFs reaching a 3.5-year high [16]

Core Viewpoint - Arthur Hayes proposes that a Federal Reserve bailout of distressed Japanese markets, disguised as currency intervention, could drive Bitcoin prices higher [1][2]. Group 1: Federal Reserve Actions - The Federal Reserve may print dollars to buy yen and use those yen to purchase Japanese Government Bonds (JGBs), which would expand its balance sheet and lead to more money printing [2][6]. - Hayes anticipates that Bitcoin will rise alongside the Fed's expanding balance sheet, predicting a potential price of $110,000 for Bitcoin [2][3]. Group 2: Japanese Market Conditions - Japan's financial markets are showing signs of stress, with a sharply weakened yen and rising bond yields, indicating a loss of investor confidence [4]. - The weak yen is causing imported inflation in Japan, and falling bond prices are leading to significant unrealized losses for the Bank of Japan, the largest local bond holder [4]. Group 3: Implications for the US - Japan holds $2.4 trillion in US Treasuries, and rising Japanese bond yields may force Japan to sell these Treasuries to buy its own bonds, potentially increasing US borrowing costs [5]. - The US Treasury Secretary can intervene in currency markets using the Exchange Stabilisation Fund, but only the Federal Reserve can print money [6]. Group 4: Monitoring Indicators - Hayes suggests that an increase in the Fed's "Foreign Currency Denominated Assets" line item would signal a good time to increase Bitcoin holdings [7].

Currency Market - The Malaysian ringgit, Thai baht, and South Korean won appreciated as the Bloomberg Dollar Spot Index fell to its lowest since February 2022, reflecting investor caution towards the US dollar amid unpredictable US policymaking [1][12] - The dollar's decline was exacerbated by President Trump's comments indicating a lack of concern over the currency's weakening, which has raised uncertainty regarding the Federal Reserve's independence [3][13] Stock Market - Asian stocks showed mixed results, with South Korea rising while Japan fell; US equity-index futures gained following reports of SoftBank's potential $30 billion investment in OpenAI [2][12] - A significant portion of S&P 500 companies, approximately one-third by market capitalization, are set to report earnings this week, including major players like Microsoft, Meta, and Tesla [11][13] Federal Reserve and Economic Outlook - The Federal Reserve is expected to announce its interest-rate decision soon, with indications that it may halt its rate-cutting cycle due to a steadier jobs market [9][10] - The Fed's messaging is likely to focus on a data-driven approach to future policy decisions, reflecting the current strength of the economy [10][13] Commodities Market - Gold traded slightly below its record high, silver advanced, and West Texas Intermediate crude edged up, all priced in dollars, indicating market reactions to currency fluctuations [8][13]

Market Performance - The Nikkei rose 0.85% to close at 53,333.54, while the broader Topix ended 0.31% higher at 3,563.59, driven by technology stocks [1][7] - Advantest jumped 5.85% and Tokyo Electron rose 2.53%, contributing to the overall market gains [3][7] - Tokyo Electric Power fell 7.925%, becoming the worst percentage loser on the Nikkei after announcing plans to cut about 3.1 trillion yen ($20 billion) in costs over 10 years [7] Currency and Economic Context - The yen had spiked against the U.S. dollar, reaching a more than two-month high, but weakened towards the end of the session, which supported the market [1][2] - Speculation grew over coordinated currency intervention by U.S. authorities following remarks from Japan's prime minister and a leading currency diplomat [2][7] - The current level of the yen is viewed as negative for exporters but positive for the election campaign, as stated by Hiroyuki Ueno, chief strategist at Sumitomo Mitsui Trust Asset Management [6][7] Political Developments - Japanese political parties began an election campaign on Tuesday after Prime Minister Sanae Takaichi called for a national election on February 8 [6][7] - A stronger yen is seen as positive for Takaichi, who supports loose monetary policy, while a weaker yen raises import costs and drives inflation, putting pressure on the central bank [6][7]

Core Viewpoint - The rising yen has negatively impacted the dollar, which is near a four-month low due to various domestic issues, including a potential U.S. government shutdown and political instability under President Trump [1][11]. Currency Market Dynamics - The yen has stabilized around the 153-154 per dollar level, with the latest rate at 154.24 per dollar, recovering from a low of 159.23 [2][11]. - The dollar has fallen more than 1% against a basket of currencies this year, currently at 97.05, having reached a low of 96.808 [8][11]. - The euro is steady at $1.1878, while sterling is at $1.3678, both having reached higher peaks recently [7][11]. Federal Reserve and Political Influence - The Federal Reserve is set to begin a two-day policy meeting, overshadowed by ongoing political issues, including a criminal investigation involving Chair Jerome Powell [9][11]. - Concerns about the independence of the Federal Reserve are growing, particularly if Powell resigns, which could negatively affect the dollar [10][11]. Intervention Speculation - There is speculation about a potential coordinated currency intervention by U.S. and Japanese authorities, which has made investors cautious about pushing the yen lower [6][11]. - Analysts suggest that while the market is currently wary, renewed attempts to test Japanese authorities' resolve may occur if no intervention happens soon [6][11].