The yen came under renewed pressure this week after comments from Prime Minister Sanae Takaichi raised questions over whether Tokyo will intervene in currency markets to support the yen

Most Asian currencies moved in a tight range on Wednesday, while the yen lagged ahead of a snap election in the coming days.

The Indian rupee remained upbeat after a U.S.-India trade deal this week, while the Australian dollar held on to sharp gains from Tuesday after the Reserve Bank raised interest rates and presented a hawkish stance.

The yen’s USD/JPY pair gained nearly 0.4% on Wednesday, and was close to its highest level in nearly two weeks.

The yen came under renewed pressure this week after comments from Prime Minister Sanae Takaichi raised questions over whether Tokyo will intervene in currency markets to support the yen.

Focus is now squarely on a snap lower house election scheduled for February 8, with Takaichi’s party poised to score a strong victory and give her a greater grip on Japan’s parliament.

A strong majority gives Takaichi more headroom to carry out her expansionary fiscal plans– questions over which had been a major weight on the yen in recent months.

Traders grew increasingly concerned that Takaichi’s spending plans will further increase Japan’s already high government debt levels– a notion that sparked a rout in Japanese government bonds and pressured the yen.

Among other currencies, the Indian rupee’s USD/INR pair steadied around the low-90 rupee levels, after dropping sharply from recent record highs on a U.S.-India trade deal. Focus this week is on a Reserve Bank of India meeting on Friday.

The Australian dollar’s AUD/USD pair remained upbeat after rallying on a hawkish RBA meeting on Tuesday.

The won’s USD/KRW pair added 0.1%, while the yuan’s USD/CNY pair steadied close to its lowest level since mid-2023.