Markets earlier in the week were shocked by the drastic action of Turkish President Tayyip Erdogan who sacked the central bank governor, thus pushing the lira currency to a four -month low against the US dollar.
Erdogan fired the central bank governor just two days after a significant increase in interest rates aimed at curbing a nearly 16% rise in inflation and supporting the lira.
The new central bank governor may mean a reversal of hawkish measures taken to fight inflation, and could result in prolonged market volatility, according to analysts.
The Japanese yen rose higher against the euro and other antipodean currencies supported by speculation that individual Japanese investors who have bought the lira recently at a high price will be forced to cut losses and close their positions.
In addition, it was also supported by the Bank of Japan's (BOJ) monetary policy adjustment which extended its 10-year bond yield target to move in the +/- 0.25%range.
The BOJ also removed their annual minimum target for equity purchases and announced they would only buy exchange -traded funds (ETFs) related to TOPIX not NIKKEI 225.
These measures are seen as a positive thing for the yen as they ease the support of the central bank of the economy.
Meanwhile, concerns about the incident in Turkey will cause disruption in other financial markets also supporting the greenback dollar due to its status as a safe-haven currency.
The Turkish lira traded around 8.10 against the US dollar at the start of the Asian session, down 11% when it closed on Friday.
