Bad debts of American banks ignite global safe-haven demand, causing the yen to rebound and break through 150.

Notice that the yen briefly rose above the 150 mark against the US dollar, rebounding from an eight-month low, as global demand for safe-haven assets was driven by bad loans from two US banks. The yen's performance on Friday outpaced most other currencies in the Group of Ten (G10), with the dollar-yen exchange rate briefly rising by 0.4% to 149.90 yen per US dollar, its highest level since October 6. As of publication, the exchange rate was at 150.10 yen per US dollar. The Swiss franc also appreciated, while the US currency and bond yields were dragged down by selling pressure on regional bank stocks. A week ago, the yen rate fell to its lowest level since February due to the election of Taro Kono as leader of the ruling Liberal Democratic Party, followed by the unexpected collapse of the ruling coalition in Japan causing the yen to fluctuate drastically. Christopher Wong, foreign exchange strategist at Oversea-Chinese Banking Corporation, said, "Amid risk aversion, the dollar-yen exchange rate continued to fall as US Treasury yields declined. The focus is also on the formation of alliances in Japan, particularly whether the Liberal Democratic Party and Japan Innovation Party can reach an agreement." Political uncertainty has lowered expectations for a rate hike by the Bank of Japan this month. Nevertheless, Bank of Japan Governor Haruhiko Kuroda told reporters in Washington on Thursday that the central bank will continue to tighten policy if confidence in achieving economic outlook strengthens, opening the door for a rate hike in the near future. Strategist Mark Cranfield said, "Forex traders looking back at 2023 will note that during the regional banking crisis, the dollar-yen exchange rate fell by about 800 points from its peak to its low point. A similar scenario this time suggests that the currency pair will fall to around 146 this month." He added, "The main driving factor once again is the sharp drop in US Treasury yields, with the two-year Treasury yield falling to levels seen three years ago. Also, with traders pricing in the possibility of the Fed's target rate reaching around 3%, there is significant downside potential."