Yen Surges 1% Against Dollar Amid Trump Tariffs, Safe-Haven Demand

The Japanese yen appreciated by 1% against the U.S. dollar, outpacing all other G-10 currencies, as investors flocked to safe-haven assets in response to President Donald Trump's tariff measures. The yen reached a high of 144.81 yen per dollar, driven by concerns over inflation and economic uncertainty.

The tariff measures, which are expected to increase inflation, have put significant pressure on the U.S. dollar. The Federal Reserve is anticipated to lower interest rates multiple times by the end of the year, further weakening the dollar and pushing the USD/JPY pair close to its lowest level since October 2024. Despite Trump's openness to dialogue, he has ruled out the possibility of delaying new reciprocal tariffs, warning that these measures could remain in place indefinitely.

In Japan, the country's February current account surplus was driven by export growth and import decline. However, the broader economic outlook remains uncertain, with concerns about a potential recession driving demand for safe-haven assets. The yen's strength is also supported by the Federal Reserve's expected rate cuts, which are seen as a response to the economic uncertainty caused by the tariff measures. The combination of higher inflation expectations and lower interest rates has made the yen an attractive safe-haven currency, as investors seek to protect their assets from the potential fallout of the trade war.

The yen's rise against the dollar reflects the broader market sentiment, as investors become increasingly risk-averse in the face of global economic uncertainty. The tariff measures have created a climate of uncertainty, leading investors to seek the stability and security offered by the Japanese yen. This shift in investor sentiment has contributed to the yen's appreciation, as it is seen as a reliable store of value in times of economic turmoil.