The yen fell to its weakest level in a year-and-a-half against the dollar on Wednesday on speculation about a potential snap election that could pave the way for fiscal stimulus, prompting traders to consider the possibility that Japanese officials may step in to prop up the currency.

Japan's financial authorities are getting annoyed about the weak yen. And it's easy to see why. The currency early Wednesday fell to more than 159 per U.S. dollar, leaving it only a few yen shy of its weakest in more than 30 years,

Speculation over snap polls and big spending plans weakens currency, pushing traders to brace for Tokyo’s next move

The Japanese yen rebounded from an 18-month low against the dollar on Wednesday as Japanese officials warned of potential intervention to shore up the currency, while the U.S. currency was modestly weaker against the euro as traders continued to evaluate likely Federal Reserve policy.

The USD/JPY pair jumps to near 159.15, the highest since July 2024, during the early Asian session on Wednesday. The Japanese Yen (JPY) weakens against the US Dollar (USD) amid concerns about looser fiscal and monetary policy in Japan.

USD/JPY eyes 160 as Japan election risks and fiscal stimulus plans send JGB yields higher and weaken the yen despite growing BoJ rate hike expectations.

Asian stocks rose on Wednesday, buoyed by Japanese shares, as investors braced for a snap election in Japan that could lead to more fiscal stimulus, while worries about central bank independence and benign U.

We won’t rule out any means and will respond appropriately to moves that are excessive, including those that are speculative,” said Finance Minister Satsuki Katayama.

Asian shares extended gains from Tuesday’s all-time closing high, as a weaker yen fueled a record-breaking rally in Japanese equities.

Japan’s finance minister issued a fresh warning to speculators after the yen weakened to its lowest level against the dollar in 18 months amid reports of a snap general election.

The yen further edged higher against the dollar, but ING said Prime Minister Takaichi’s plan to hold a snap election weakened the likelihood the currency’s valuation would recover.