Japanese Yen Hits 20-month Low

The Japanese yen strengthened past 159.5 per dollar on Monday, trimming last week’s losses amid concerns that breaching the key 160 level could prompt foreign exchange market intervention by authorities. Finance Minister Satsuki Katayama said the government is monitoring currency movements closely and is prepared to act with strong measures if needed. The yen had fallen for four straight weeks as the Iran war and surging oil prices weighed on Japan’s oil-importing economy. Markets are also speculating that the US will soon announce a coalition of countries to escort ships through the Strait of Hormuz, although a senior Japanese official said the threshold is “extremely high” for Tokyo to deploy warships to help protect the shipping lane. Meanwhile, the Bank of Japan is expected to hold its policy rate steady this week amid heightened uncertainty over the Iran war’s impact on the domestic economy.

The Japanese Yen touched 159.69 against the USD, the lowest since July 2024. Over the past 4 weeks, US Dollar Japanese Yen gained 4.05%, and in the last 12 months, it increased 7.45%.

The Japanese yen traded around 159.4 per dollar on Friday, hovering near its weakest levels since July 2024, raising concerns of possible intervention by authorities. Finance Minister Satsuki Katayama said they are preapred to take all necessary steps in currency markets amid surging oil prices. Bank of Japan Governor Kazuo Ueda also warned that a weak yen could intensify imported inflation amid rising oil prices, potentially prompting the central bank to accelerate policy normalization. Ueda added that exchange rates now have a larger impact on inflation than in the past, giving them greater weight in policy decisions. Oil prices surged after Iran’s new supreme leader, Mojtaba Khamenei, pledged to keep the Strait of Hormuz effectively closed while Tehran increased attacks on regional oil and transport facilities. The Middle East conflict showed no signs of easing, with defiant rhetoric from Tehran and Washington signaling that the Iran war remains far from de-escalation.