The Japanese yen has slumped to a 10-month low — and it’s getting to a point where Japanese authorities may have to act. In his daily research note, market strategist David Rosenberg predicted the Bank of Japan is on the cusp of having to change policy to stabilize its currency.

Prime Minister Sanae Takaichi said a Chinese attack on Taiwan could constitute “a survival-threatening situation” for Japan, drawing sharp criticisms from Beijing.

Conditions are ripe for a strong rally in the 'safe haven' Japanese yen, with a global stock market selloff sparking volatility across asset classes. But the Japanese currency is falling fast, calling into question its long-perceived role as a preferred hiding spot for spooked investors.

Japan’s longer-maturity sovereign bonds fell sharply on Monday over renewed fiscal concerns ahead of the government’s first economic package expected to be unveiled as soon as this week.

Beijing is flexing its military and economic might to show its displeasure with the Japanese leader’s comments about defending Taiwan. But its aggressive approach risks backfiring.

The postponement comes barely two weeks after remarks about Taiwan by Japanese Prime Minister Sanae Takaichi sparked a heated response from China and kicked off the most serious diplomatic clash between the two East Asian powers in years.

China has intensified its economic pressure on Japan, with state-owned enterprises banning employees from travelling to its Asian neighbour, tour groups and a flagship forum being cancelled and Japanese film releases suspended.