Asia-Pacific FX news summary: Yen and Japanese stocks continue to rise

February 9, 2026

Market Overview

US-India trade pact aims for a $500 billion purchasing target and includes tariff reductions.
Reports indicate President Trump may roll back significant climate change research via extensive deregulation.
The onshore yuan in China reached its highest level since May 10, 2023.
Japan is hastily advancing its budget amid ongoing discussions around food tax reductions and funding.
Vitol has adjusted its long-term oil demand predictions, suggesting peak demand won’t occur until the mid-2030s.
Japanese stocks hit new heights today driven by positive financial results and robust market activity.
South Korea plans to reassess US investment initiatives ahead of a major trade proposal.
The People’s Bank of China set the central rate for USD/RMB at 6.9458, slightly above the forecast of 6.9135.
Alphabet aims to issue a 100-year bond, marking a significant moment since the dot-com era.
Business activity in Australia showed a slight cooldown as cost-related pressures diminish.
UK retail sales showed a strong beginning for January, recording the largest increase since August.
Singapore’s economy is projected to grow significantly, leading to a major upward revision of its 2026 outlook.
Weak consumer sentiment in Australia contributes to the RBA’s March suspension, but Westpac still anticipates a rate hike in May.
Goldman Sachs suggests the dollar/yen could exceed 160 yen as Japan increases fiscal stimulus, raising risks of intervention.
President Trump has expressed a desire to initiate talks with Canada “immediately.”
Japan’s recent election outcomes may facilitate fiscal reforms, with analysts predicting rising stock prices despite debt concerns.
Villeroy’s potential exit is unlikely to alter ECB policies, with a rare consensus still appearing strong.
The Bank of England’s Mann mentions that US tariffs are contributing to increased prices of Chinese goods in the UK.
China has instructed banks to limit their exposure to US Treasuries due to concerns over potential “selling America.”
In the US market, the dollar has weakened significantly while stock prices are on the rise.

Market Analysis

Japanese stocks have been reaching record highs, and the yen is appreciating, complicating the usual dynamics between foreign investments and currency hedging.
Some analysts speculate that foreign investors may be more hesitant to hedge against yen exposure post-election, though sentiments appear mixed.
Consumer confidence in Australia is noticeably low, even as some business surveys report easing cost pressures.
After a strong run in 2025, Singapore has revised its growth forecasts upward for 2026.
The yuan in China has strengthened to its highest value since May 2023, while gold prices have declined.

Typically, foreign purchases of Japanese stocks come with corresponding yen sales to mitigate currency risks, but recent trends suggest a shift. Post-election, the yen has appreciated even as the stock index reaches new heights.

This week, Japanese stocks have surged on expectations that the new government will implement more favorable economic policies, particularly benefiting manufacturing and defense sectors. Interestingly, some analysts are questioning whether foreign investors might prefer to hold onto yen positions rather than hedging them—this could indicate less downward pressure on the yen in the long run. I still have my reservations on this theory, but it’s worth considering given the market discussions.

In terms of other foreign currencies, the market has remained relatively stable.

In Australia, the Westpac Melbourne Institute Consumer Confidence Index dropped by 2.6 points to 90.5 in January, reversing gains from last year’s rate cuts. Notably, ANZ and Roy Morgan indicators showed even weaker sentiment. Conversely, the National Australia Bank’s Business Survey indicates a more optimistic picture with gradual improvements in business confidence, alongside declines in labor costs, purchasing costs, and final prices—these factors might ease concerns for the Reserve Bank of Australia regarding inflation pressures.

Across Asia, Singapore has raised its growth forecast to 2-4% for this year, fueled by a stronger-than-anticipated 2025 end and supportive global conditions. Meanwhile, the onshore yuan strengthened to 6.91 per dollar, marking a notable recovery since May 2023.

Gold prices, however, remained stagnant as market sentiment turned increasingly cautious.