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A sharp shift toward safe-haven assets is underway in global financial markets. With the dollar weakening and investor anxiety rising, capital is flowing into the Japanese yen—long considered a safe-haven currency. The USD/JPY fell 0.86% to 145.581, pushing the KRW/JPY rate above 10.00 for the first time since March 2022.

Tariff Fears Trigger Risk-Off Sentiment

Investor risk aversion is intensifying as fears of a global trade war rise. U.S. President Donald Trump’s aggressive tariff policy has escalated tensions between the U.S. and China. Both countries have begun imposing retaliatory tariffs, raising uncertainty across global trade. As a result, market participants are pulling capital out of risk assets and moving into safer territory—namely the Japanese yen.

Yen Benefits From Trade Policy Turmoil

The yen’s traditional role as a safe-haven currency is once again in the spotlight. Historically, during times of economic or geopolitical instability, the yen has served as a reliable store of value. This pattern is repeating, with investors exiting the dollar and rotating into yen assets.

Adding to market anxiety, the Trump administration announced it will impose reciprocal tariffs on April 9, following the implementation of a 10% universal tariff that applies to all trading partners. This aggressive stance is exacerbating pressure on global trade, particularly for export-driven economies, and further driving investors toward safe-haven assets like the yen.

Can the Yen Strengthen Further?

The sustainability of yen strength remains uncertain, but as long as the Trump administration maintains its hardline tariff stance, trade tensions are likely to persist. If risk-off sentiment dominates, the yen could remain strong in the near term.

Given these conditions, investors may want to consider increasing their allocation to safe-haven assets. The unusual combination of a weakening dollar, rising trade tensions, and persistent political risk in South Korea—contributing to continued won weakness—points to a defensive positioning strategy. Should global macro uncertainty persist, the demand for safe assets like the yen could grow stronger.