LIVE MARKETS-A safe haven yen in a stormy 2025?

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A SAFE HAVEN YEN IN A STORMY 2025?

There are few fireworks for the yen JPY=EBS going into the new year.

The currency has lost more than 10% against the dollar in 2024, despite multiple intervention attempts by officials in Tokyo during the year, and more uncertainties lie on the horizon, with potential U.S. tariffs in 2025.

Japan's opposition party warned already in November that U.S. President-elect Donald Trump's policies could boost inflation and lead to higher U.S. interest rates, and in turn further weaken the yen's value against the greenback.

But could political turbulence offer a silver lining for yen crosses next year?

City Index market analyst Matt Simpson writes that he has his "eyes on a bearish prize for euro/yen in 2025" - and an uptick in demand for the yen's safe-haven status in a politically rowdy time plays a key part in his argument.

The euro is up 4.8% against the yen this year, rising for a fifth year in a row.

Diverging central bank outlooks next year could be one thing that tempers the yuppy - the nickname for the euro/yen pair - according to Simpson. Namely, that the European Central Bank is expected to keep easing interest rates, while the Bank of Japan is more likely to hike rates, thereby creating an advantage for the Japanese currency.

But as markets brace for a noisy year ahead, the yen's status as a safe-haven currency could come into play.

"If we also factor in the likely turbulence of another Trump presidency, the demand for the yen as a safe-haven could also play an important factor in 2025," Simpson says.

(Greta Rosen Fondahn)

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