Yen Falls for Second Straight Session

The Japanese yen weakened to around 157.5 per dollar on Tuesday, extending losses for a second consecutive session as the dollar strengthened after President Donald Trump raised doubts over the durability of the US-Iran ceasefire following his rejection of Tehran’s latest peace proposal, keeping inflation risks in focus. Meanwhile, Japan and the US reiterated close coordination on currency policy after Japanese Finance Minister Satsuki Katayama met with US Treasury Secretary Scott Bessent. Tokyo is suspected to have spent more than $63 billion intervening in foreign exchange markets to support the yen, although authorities have not confirmed the operations. Elsewhere, the Summary of Opinions from the Bank of Japan’s April meeting indicated that policymakers are considering potential interest rate increases as early as the next meeting, as surging oil prices continue to heighten inflationary pressures.

The Japanese yen slid to around 157 per dollar on Monday, reversing gains from the previous week as the dollar strengthened on safe-haven demand after President Donald Trump rejected Iran’s response to his peace proposal, dimming hopes for an imminent end to the 10-week conflict. Reports also indicated that Iran had proposed transferring part of its highly enriched uranium stockpile to a third country, while refusing to dismantle its nuclear facilities. Oil prices jumped, heightening inflation concerns and weighing on oil-importing economies such as Japan. Meanwhile, traders remain on alert after multiple rounds of suspected intervention by Japanese authorities starting April 30, which reportedly totaled about 10 trillion yen. While Tokyo has not confirmed intervention, top currency diplomat Atsishu Minura said officials are prepared to respond on all fronts to speculative moves, noting that the IMF places no strict limits on the frequency of intervention.

The Japanese yen traded near 157 per dollar on Friday and was set to end the week little changed, as intervention fears and fresh verbal warnings from Tokyo failed to sustain the recent rally. Japan’s top currency diplomat said on Thursday that the country has no limits on how frequently it can intervene in currency markets and maintains daily communication with US authorities. The yen had initially surged on April 30 amid suspected intervention, with another bout of movement seen on May 6, although the Ministry of Finance has not confirmed any official action in the foreign exchange market. Meanwhile, data showed that Japan’s real wages rose for a third consecutive month in March, reinforcing expectations that the Bank of Japan could continue tightening policy. On the external front, the yen faced renewed pressure from a stronger US dollar as clashes between the US and Iran in the Strait of Hormuz kept geopolitical tensions elevated.