Tokyo, we have a problem.
The Japanese yen hit a four-month high against the greenback on Wednesday, complicating the export-oriented country’s efforts to weaken the currency.
Jitters over President Donald Trump’s ability to push through pro-business policies triggered a sharp stock sell-off on Tuesday and sent investors scrambling for haven assets.
The flight for safety continued on Wednesday, sending the yen 0.9 per cent higher to 110.76 per dollar. That’s its strongest level since November 18, extending the currency’s gains so far this year to over 5 per cent.
The dollar’s retreat comes amid mounting nervousness over a key vote in Congress on Thursday over Mr Trump’s plans to dismantle Obamacare. Signs that the president might not be able to rally the support needed to pass the bill have raised questions over whether he would be able to deliver on the expected tax cuts, stimulus spending and deregulation that have powered stock markets to record high after high this year.
The dollar has been also been pressured by unexpectedly dovish comments last week from the Federal Reserve over the pace of future interest rate hikes.