What else is weighing on the US dollar?
Analysts said the dollar’s recent weakness reflects broader concerns about Washington’s policy direction and investor confidence in US assets, rather than developments in Japan alone.
In any case, it remains unclear whether any joint action by Japan and the US would signal a deliberate American preference for a weaker dollar, Mr Sim said.
“That’s a speculation, and it may not be true,” he noted.
Earlier signs of dollar weakness emerged even before speculation about yen intervention intensified.
The dollar came under pressure after US President Donald Trump threatened tariffs on some European countries over Greenland, raising fears of renewed trade tensions.
Such uncertainty can reduce foreign investors’ appetite for US assets, including equities and government bonds, which in turn weakens demand for the US dollar.
Trump’s Greenland threat, for instance, triggered what is known as a “triple sell-off”, with declines in the US dollar, equities and government bonds occurring at the same time. This suggested investors were reassessing the perceived safety of US markets.
Then on Jan 27, Trump triggered a flight from the US dollar, pushing it to a near four-year low after he brushed off the greenback’s weakness.
When asked by a reporter if he thought the value of the dollar had declined too much, Trump said: “No, I think it’s great, the value of the dollar … dollar’s doing great.” Traders took his comments as a signal to sell the greenback aggressively.
Trump’s comments were not exactly new, but they came at a time when the dollar had already been under pressure.
“It shows there’s a crisis of confidence in the US dollar, and it would appear that while the Trump administration sticks with its erratic trade, foreign and economic policy, this weakness could persist,” said Kyle Rodda, a senior market analyst at Capital.com.
“The weak dollar flies in the face of otherwise strong fundamentals. The US economy remains exceptional and the dollar should be reflecting that,” said Rodda.
“But because of Trump’s behaviour, it’s not.”
Steve Englander, head of global G10 currency research at Standard Chartered in New York, said forex traders are “always looking for a trend to jump on”.
“Often officials push back against abrupt currency moves but when the president expresses indifference or even endorses the move, it emboldens USD sellers to keep pushing,” he told Reuters.
Mr Ng noted that the US dollar’s performance has been uneven. While it fell against some Asian currencies, it was not weakening against others such as the rupee, peso or rupiah, reflecting differences in domestic economic conditions and capital flows.
Movements in commodity prices, including oil and gold, also affect currencies differently, he said.