Yen Trades Near 40-Year Lows

The Japanese yen traded around 162.3 per dollar on Monday, hovering near its weakest level since 1996 as a stronger dollar and surging oil prices, driven by the escalating conflict in the Middle East, continued to weigh on the currency. The US military carried out fresh airstrikes against Iran following the deaths of three American service members, while Tehran said its ceasefire with the US had effectively collapsed and that it intercepted four vessels transiting the Strait of Hormuz over the weekend. Japan remains heavily dependent on oil imports from the Middle East, leaving the yen particularly vulnerable to supply disruptions and higher energy costs. Investors also saw little indication of decisive action from Tokyo to support the currency, while awaiting intervention data due later this month for clues on whether Japanese authorities were behind the sharp but short-lived yen rallies seen in recent weeks.

The Japanese yen weakened toward 162.5 per dollar on Friday, hovering near its weakest level in four decades as investors saw little sign of decisive action from Tokyo to support the currency. A recent report also indicated that Japan has no immediate plans to alter the asset allocation of its state pension funds, reducing expectations for near-term support for domestic financial markets. Investors are now awaiting intervention data due later this month to assess whether Japanese authorities were behind the sharp but short-lived rallies in the yen seen in recent weeks. The currency also remained under pressure from a sharp rise in oil prices this week, driven by the escalating conflict between the US and Iran, which effectively unraveled the interim peace agreement. As Japan depends heavily on energy imports from the Middle East, the country remains particularly vulnerable to disruptions in regional energy supplies.

The Japanese yen steadied near 162 per dollar on Thursday, drawing support from a weaker dollar after softer-than-expected US inflation data eased concerns about imminent Federal Reserve interest rate hikes. Still, the outlook remained clouded by rising geopolitical tensions in the Middle East, with oil prices climbing after US forces carried out additional strikes on Iran while reinstating a US blockade against Tehran in the Strait of Hormuz. In Japan, data showed machinery orders declined more than expected in May, highlighting broad-based weakness in business investment. Despite the modest rebound, the yen remained near 40-year lows amid the absence of concrete measures from Tokyo to bolster the currency. A recent report also indicated that Japan has no immediate plans to adjust the asset allocation of its state pension funds, dampening expectations for near-term support for domestic assets.