The US Dollar is pushing the Yen to fresh multi-month highs, supported by a sharp rise in long-term Japanese government bond (JGB) yields. According to BBH FX analysts, the move reflects growing fiscal concerns in Japan as well as escalating tensions between Tokyo and Beijing.
JGB Sell-Off Intensifies Yen Weakness
“USD/JPY is hitting new multi-month highs, driven partly by a sell-off in JGBs,” analysts said. “Long-term JGB yields are breaking higher amid worries about fiscal excess and a deteriorating Japan-China diplomatic climate.”
Japanese Prime Minister Sanae Takaichi is reportedly preparing a new fiscal stimulus package that could surpass last year’s ¥13.9 trillion (2.2% of GDP) supplementary budget—fueling fears of further debt expansion.
At the same time, tensions with Beijing are rising. China’s Foreign Ministry spokesperson Mao Ning warned that China would take “serious countermeasures” if Tokyo does not withdraw recent remarks made by Takaichi regarding Taiwan.
