Yen Rebounds Amid Global Geopolitical Tensions

The yen regained some strength after recent declines, as speculation about interest rate hikes in Japan and potential government intervention continues. Thin end-of-year trading kept European currencies stable. A summary of opinions from the Bank of Japan's December meeting revealed ongoing discussions about further rate increases.

The yen regained its footing on Monday following last week's dip as the market evaluated the timing of further interest rate hikes in Japan and considered potential government intervention. Sparse trading toward year-end kept European currencies largely unchanged.

The Bank of Japan's policymakers are actively debating the necessity for continued interest rate hikes, according to a summary of their December meeting released on Monday. Japan's Finance Minister, Satsuki Katayama, signaled readiness to intervene in the currency markets, stating last week that Japan can act freely against excessive yen movements.

In other markets, geopolitical developments held the spotlight. U.S. President Donald Trump and Ukrainian President Volodymyr Zelenskiy reported progress towards resolving the conflict in Ukraine. Meanwhile, China and North Korea continued military activities in Asia, adding volatility to global currencies.

(With inputs from agencies.)