Yen Heads for Third Weekly Fall

The Japanese yen traded around 157.5 per dollar on Friday, on track for its third consecutive weekly decline, pressured by the dollar’s strength as investors sought the reserve currency amid the escalating Middle East conflict. The US-Israeli offensive against Iran has now entered its seventh day, while Tehran launched a fresh wave of missile and drone strikes across the Gulf. The yen also faced headwinds from soaring oil prices, reflecting Japan’s heavy reliance on Middle East energy imports. Bank of Japan Governor Kazuo Ueda warned that the conflict could significantly affect Japan’s economy, signaling a likely prolonged hold on interest rates. Meanwhile, Finance Minister Satsuki Katayama said this week currency market intervention remains an option to support the yen, emphasizing that authorities are monitoring the decline “with a strong sense of urgency” and coordinating closely with the US.

The Japanese yen strengthened past 157 per dollar on Thursday, extending gains from the previous session as the dollar pulled back on hopes for an end to hostilities in the Middle East and easing inflationary concerns. However, traders remain on alert for further escalation as the US-Israeli war on Iran has now entered its sixth day, with the US sinking an Iranian warship off the coast of Sri Lanka. Inflation worries also eased as the Trump administration moved to reassure markets over commercial activity in the Gulf. Domestically, Bank of Japan Governor Kazuo Ueda cautioned that the Middle East conflict could materially impact Japan’s economy, signaling a likely prolonged hold on interest rates. Meanwhile, Finance Minister Satsuki Katayama said currency market intervention remains an option to support the yen, noting that authorities are monitoring the decline “with a strong sense of urgency” and are coordinating closely with the US.

The Japanese yen held its recent decline to around 157.6 per dollar on Wednesday, pressured by the greenback as concerns that a prolonged Middle East conflict could keep energy prices elevated stoked inflation worries. Markets scaled back expectations for Federal Reserve rate cuts, pushing back bets on the next reduction from July to September. The dollar also emerged as the clear leader among safe-haven currencies as the US-Israeli war on Iran entered its fifth day. Meanwhile, Japanese Finance Minister Satsuki Katayama said currency market intervention remains an option to support the yen, noting authorities are monitoring the decline “with a strong sense of urgency” and are closely coordinating with the US. Elsewhere, Bank of Japan Governor Kazuo Ueda warned that the Middle East conflict could significantly affect Japan’s economy, signaling the central bank is likely to keep rates steady for an extended period.