Yen rushes to seven-month high on Fed independence concerns

The Japanese rose in Asian trade on Monday against major rivals, expanding gains for the second straight session against the US dollar and hitting a seven-month high.

It comes amid strong haven demand as investors lose confidence in the US economy once more due to concerns about US President Donald Trump’s plans to restructure the Federal Reserve, which could impact its independence. 

Recent data showed renewed inflation pressures on Bank of Japan policymakers, raising the odds of May interest rate hike.

The Price

The USD/JPY fell 1% today to 140.60, the lowest since September 2024, with a session-high at 142.11.

The yen rose 0.2% on Friday amid calm holiday trading.

IT surged 0.95% last week against the dollar, the third weekly profit in a row following aggressive remarks by Bank of Japan officials.

Fed’s Independence 

The White House said it’s considering ways to fire Fed Chair Jerome Powell after Trump expressed urgent desires to terminate him due to disagreements about monetary policies.

Such news continue to rattle the markets, which depend heavily on the independence of the Federal Reserve from any political interference as a pivotal mainstay in the global financial system.

Japanese Rates

Recent Tokyo data showed core consumer prices rose in March, raising inflationary pressures once more on policymakers.

Bank of Japan Governor Kazuo Ueda said the central bank will continue to hike interest rates if inflation moves towards the 2% target.

He says the BOJ will monitor economic developments without prejudice due to uncertainty because of US tariffs.

Following the remarks and data, the odds of a 0.25% BOJ rate hike in May rallied from 10% to 35%.