A strategic shift is underway among Japanese investors as higher domestic yields and a gradually normalizing monetary policy weaken the appeal of U.S. assets. Nomura Holdings, Inc. $8604.T estimates that the Japanese yen (JPY) could strengthen by roughly 6% against the U.S. dollar (USD) over the coming months, pushing the $USDJPY pair from 145 to 136 by the end of Q3.

Currency markets in the Asia-Pacific region experienced a positive trend on Monday, September 18, as major currencies strengthened against the US dollar. Leading this trend was the Taiwanese dollar, which reached a three-year high. The key economic factors contributing to this movement are outlined below.

On Thursday, the Japanese yen significantly strengthened its position in the international currency market. This occurred against the backdrop of anticipated interest rate hikes in Japan, while other regions are experiencing rate cuts.

On Monday, the Japanese yen and Swiss franc strengthened against major currencies amidst a massive sell-off in technology stocks. This movement came as markets assessed the impact of a new open-source artificial intelligence model launched by the Chinese startup DeepSeek.