The U.S. dollar strengthened against the Japanese yen on Wednesday, with the USD/JPY pair trading around 159.45, its highest level since mid-2024.
The yen has remained under pressure in recent sessions, hovering near 159.2 per dollar, raising fresh concerns in markets about the possibility of intervention by Japanese authorities to support the currency.
Bank of Japan warns about weak yen impact
Kazuo Ueda, Governor of the Bank of Japan, warned that the weakening yen could intensify imported inflation, particularly as global oil prices continue to rise.
Ueda noted that exchange rate movements now have a greater impact on inflation than in previous years, meaning the central bank may need to consider faster policy normalization if currency weakness persists.
Oil surge adds pressure on yen
Energy prices have surged amid escalating tensions in the Middle East. Oil markets reacted sharply after reports that Mojtaba Khamenei, Iran’s newly declared supreme leader, pledged to keep the Strait of Hormuz effectively closed while Tehran increases attacks on regional oil and transport infrastructure.
A prolonged disruption in the Strait of Hormuz, one of the world’s most critical oil transit routes, has raised fears of tighter global energy supplies and higher import costs for countries like Japan.
War tensions remain elevated
The ongoing Middle East conflict continues to weigh on global markets, with strong rhetoric from both Iran and the United States suggesting that the conflict may persist after nearly two weeks of fighting.
Higher oil prices and geopolitical uncertainty are likely to remain key drivers for currency markets in the near term.
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