Yen Plummets Amid Political Turbulence and Fed Investigation

The yen hit its lowest level since July 2024 as Japan faces political uncertainty and a U.S. investigation into Fed Chair Jerome Powell rattles markets. Investors worry about the Fed's independence, and a potential election in Japan compounds fiscal fears, prompting depreciation of the yen.

The yen reached its lowest point since July 2024 on Tuesday amid political turmoil in Japan and uncertainties regarding the Federal Reserve's direction following a U.S. investigation into its Chair, Jerome Powell. This development has alarmed investors about the Fed's autonomy.

The political landscape in Japan added pressure as Prime Minister Sanae Takaichi hinted at dissolving the lower house of parliament, with implications for increased fiscal and monetary policy changes. This pushed the yen to historic lows against key currencies.

Currency strategists have identified these political and economic tensions as major factors for the yen's depreciation. Additionally, the Trump administration's probing of Powell has induced fears of undermining the Fed's independence, potentially influencing its monetary policy trajectory.

(With inputs from agencies.)