U.S. President Donald Trump’s trade war with China is causing a flight to safety in currency markets, and the yen is once again taking the brunt of it.

The currency surged Monday to its highest level against the dollar in seven months, fueling fears in some quarters that the volatility may put the brakes on global growth.

The Japanese government is no less spooked. On Monday it held an emergency meeting with finance chiefs to discuss the yen’s strength.

The yen was at ¥105.95 against the dollar as of 5 p.m. in Tokyo trading. It reached ¥105.80 earlier in the morning. The last time the yen was this strong was Jan. 3.

Unease spread to stocks, as well. The Nikkei 225 average plunged more than 500 points at one point before closing 366.87 down at 20,720.29, its lowest since June 4.

The Chinese yuan also weakened beyond 7 per dollar, raising the prospect that the trade dispute could deteriorate into a currency war.

By any measure, the day was a rattling one. Its roots lay in a surprise tweet Thursday by Trump announcing additional 10 percent tariffs on about $300 billion worth of Chinese imports starting Sept. 1. Trump said the move was justified because China is attempting to renegotiate a trade deal and break a promise to buy U.S. agricultural goods “in large quantities.”

When a currency appreciates, the first victims typically are exporting manufacturers. However, market analysts say it is too soon to predict long-term damage for Japanese companies. They point out that the currency will follow however the U.S.-China spat plays out.

The gains Monday reflected anxiety that the dispute will worsen.

“The fact that the yen has appreciated against the dollar is going to be a negative factor in addition to the global economy slowdown (for Japanese companies),” said Yuji Kameoka, chief currency analyst at Daiwa Securities Co.

The Bank of Japan, the Finance Ministry and the Financial Services Agency convened an emergency meeting in the afternoon to discuss the yen’s sharp rise, with officials saying that a rapid fluctuation is undesirable.

Prior to Trump’s tweet, the yen had depreciated against the dollar because Federal Reserve Gov. Jerome Powell announced an interest rate cut, said Daisaku Ueno, chief currency strategist at Mitsubishi UFJ Securities Co. The tweet reopened the trade war between the world’s largest and the second-largest economies after they had put the spat on hold at the Group of 20 summit in Osaka in June.

More pain may lie ahead. The yen will continue to rise if the situation deteriorates to the point that the U.S. Fed cuts interest rates for a third, fourth or fifth time, Ueno said.

The U.S. has ratcheted up tariffs against Chinese imports three times. It imposed 25 percent on about $34 billion in imports in July 2018, 25 percent on additional $16 billion in goods in August 2018 and 25 percent on about $200 billion in products in May.

Until then, Ueno said, both the U.S. and China were able to absorb the tariffs’ blows. But there is fear that both economies may be unable to do so a fourth time.

All the same, Ueno pointed out there is no absolute guarantee that the fourth round of tariffs will come into force, citing an example when Trump threatened to gradually increase tariffs up to 25 percent on Mexican goods in an effort to curb illegal immigration.

“The effects on Japanese firms would be these two points: How much they will bear the pressure of a U.S., Chinese and world economy slowdown, and how high the yen will go,” Ueno said. “We still have about three weeks left. We can neither definitively forecast whether the latest tariffs would be carried out nor their impact if they are.”

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