Japanese Yen Threads Intervention Levels

The Japanese yen weakened toward 160 per dollar on Tuesday, reaching levels last seen in July 2024 when Tokyo last intervened in currency markets. The yen remained under pressure from a strong US dollar and elevated oil prices amid the ongoing Middle East conflict, with President Donald Trump setting a Tuesday deadline for Iran to strike a deal or face attacks on civilian infrastructure. Tehran has rejected a US ceasefire proposal, demanding an end to hostilities in the region, lifting of sanctions, and other conditions. Meanwhile, Prime Minister Sanae Takaichi said she plans talks with Iran’s leader and a separate call with Trump as part of efforts to pursue peace. On the monetary policy front, markets are pricing in a potential Bank of Japan rate hike this month amid rising inflationary pressures.

The Japanese yen traded around 159.5 per dollar on Monday, near its weakest levels since July 2024, as the intensifying Iran conflict and rising energy costs continued to weigh on the currency. On Sunday, President Donald Trump threatened strikes on Iran’s power plants and other civilian infrastructure starting Tuesday if the Strait of Hormuz is not reopened, though Tehran rejected the ultimatum and kept the waterway effectively closed. Market expectations point to more than a 70% chance of a Bank of Japan rate hike this month, with over two additional increases expected by year-end. The IMF also recommended on Friday that the BOJ continue gradually raising rates toward a neutral level to curb underlying inflation. Separately, traders are closely monitoring for potential currency intervention from Tokyo after recent strong warnings from officials.

The Japanese yen edged near the 160-per-dollar mark on Friday, weighed down by growing uncertainties over the Bank of Japan's policy outlook. The BOJ has signaled a possible rate hike this month but faces questions over whether it will provide clear guidance ahead of the April 28 meeting. Under Governor Kazuo Ueda, the bank has rarely held policy steady when markets were expecting a move. Traders are pricing in roughly a 70% chance of a rate increase, meaning a hold could unsettle global markets already jittery over Middle East tensions. Adding to the pressure, Finance Minister Satsuki Katayama flagged rising speculative activity in currency and crude oil markets, linking the volatility to US President Donald Trump’s renewed threats against Iranian infrastructure. She warned that the government is ready to take bold measures if market disruptions persist. Despite recent declines, the Japanese yen remains on track for a weekly gain.