Rising intervention risks loom over JPY and KRW – DBS

FXStreet Insights Team FXStreet

Japanese Yen (JPY) and South-Korean Won (KRW) have fallen sharply against the US Dollar (USD) over the past three months, prompting warnings from Tokyo and Seoul. The Bank of Japan (BOJ) may bring forward rate hikes to curb imported inflation, while the Bank of Korea (BOK) cites the won’s weakness as a constraint on monetary easing. USD/JPY moves are likely to influence USD/KRW as intervention risks rise, DBS' Senior FX Strategist Philip Wee notes.

BoJ signals potential early rate hike amid Yen weakness

"We are increasingly wary of rising intervention risks in the JPY and KRW. Each currency has depreciated more than 5% against the USD over the past three months, briefly erasing this year’s gains last week. Finance ministers in Tokyo and Seoul have openly flagged one-sided and speculative moves in their exchange rates."

"On excessive currency weakness feeding imported inflation, the Bank of Japan stressed that it may bring forward its timeline for a rate hike without waiting until next year’s spring wage negotiations end. The Bank of Korea blamed the KRW’s weakness for limiting its ability to cut rates to support the domestic economy."

"Unlike Seoul, Tokyo has been explicit about its intervention threshold, stepping in before USD/JPY reached 160. When Japan intervened in July 2024, USD/JPY fell sharply from a 38-year high of 162. Given its high correlation with the JPY on an indexed basis this year, expect USD/JPY to pull USD/KRW lower when it falls."

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

EUR/USD holds above 1.1800 after Eurozone inflation figures

EUR/USD remains within a tight daily range above 1.1800 on Wednesday after the data from the Eurozone showed that the annual HICP inflation softened to 1.7% in January as expected. Private sector employment and ISM Services PMI data could ramp up the pair's volatility in the second half of the day.

GBP/USD stays bid above 1.3700, awaits top-tier US data

GBP/USD sticks to gains above 1.3700 in European trading on Wednesday. The pair takes advantage of a pause in the US Dollar rally, even as markets turn cautious ahead of the US ADP jobs report and the ISM Services PMI data. The BoE's 'Super Thursday is keenly awaited.

Gold sticks to bullish bias; eyes $5,100 as safe-haven demand persists ahead of US data

Gold advances to a fresh weekly high during the first half of the European session on Wednesday, with bulls now looking to reclaim the $5,100 mark amid a supportive fundamental backdrop. Concerns over rising tensions between the US and Iran resurfaced following overnight reports that the US shot down an Iranian drone in the Arabian Sea.

Crypto Today: Bitcoin, Ethereum, XRP tick up despite macro uncertainty, retail exodus

Bitcoin rises above $76,000 following an extended decline to $72,946 the previous day as Fed-related headlines keep investors on edge. Ethereum advances toward the $2,300 hurdle amid low retail interest, with futures Open Interest falling to $26.3 billion.

Should investors abandon AI as software stocks slide?

AI is not being abandoned by markets. It is being priced more carefully. Over the past few weeks, the underperformance of software and SaaS stocks has sparked a familiar question: is the AI trade breaking down? The answer is no.

Solana Price Forecast: SOL drops below $100 as bears tighten grip

Solana (SOL) trades below $100 at press time on Wednesday, after taking a more than 6% hit the previous day as the broader cryptocurrency market slipped. Institutional and retail demand for Solana continues to decline, while on-chain data shows a record 150 million daily transactions on Tuesday.