Japan's Nikkei 225 stock average tumbled more than 1,000 points early Monday amid a surge in the yen against the dollar, dipping below 53,000. The currency's strength has fueled speculation of foreign exchange intervention by Japanese and U.S. authorities, heightening market tensions.
Tokyo's stock market opened turbulently on Monday, January 26, 2026, as the yen surged against the dollar. According to Jiji Press, the Nikkei 225 average stood at 52,794.21, down 1,052.66 points or 1.95 percent from Friday at 9:05 a.m., after briefly tumbling more than 1,000 points below 53,000. Selling pressure hit a wide range of issues amid the currency's rapid appreciation.
In the forex market, the dollar hit a two-month low around ¥154.20 early in the session, recovering slightly to ¥155.15-16 by 9 a.m. from ¥158.38-38 late Friday. Market sources attributed intensified yen buying to speculation over foreign exchange intervention by Japanese and U.S. authorities.
Prime Minister Sanae Takaichi has warned of action against abnormal currency moves, as reported by The Japan Times. The yen extended its gains, rising 0.7 percent to ¥154.55 per dollar in early trading. Traders are on high alert for possible government intervention, potentially with rare U.S. assistance.
Speculation intensified after reports during Friday's U.S. session that the Federal Reserve Bank of New York contacted financial institutions about the yen's exchange rate. Japan's top currency official declined to comment on any rate checks. Michael Brown, senior research strategist at Pepperstone Group Ltd., noted, "Rate checks are typically the last warning before such action takes place." He added, "The Takaichi administration appear to have a much, much lower tolerance for speculative FX moves than their predecessors."
Matt Maley, chief market strategist at Miller Tabak, wrote in a note, "Most efforts to support their currency will only cause long-term rates to rise further." He concluded, "Thus, they seem to be between a rock and a hard place right now." This comes after a sharp rise in Japanese bond yields last week unsettled global fixed-income markets, drawing renewed attention to Japan.