Yen Weakens on Middle East Tensions

The Japanese yen weakened to around 162 per dollar on Monday, giving back the previous session’s gains as escalating tensions in the Middle East pressured the currency. The US and Iran exchanged fresh missile strikes over the weekend amid ongoing disputes over shipping through the Strait of Hormuz, driving oil prices higher and reinforcing expectations of interest-rate hikes to curb inflation. Japan’s economy and currency remain particularly vulnerable to higher oil prices due to the country’s heavy reliance on crude imports from the Middle East. The yen also faced additional pressure from a stronger dollar, which continued to attract safe-haven demand amid the geopolitical crisis. Last Friday, the yen surged after Finance Minister Satsuki Katayama said the government would encourage domestic pension funds to increase their allocations to Japanese financial assets.

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