Yen Tests Post-Intervention Low as Iran War and US Rate Uncertainty Lift Dollar
Japan's yen is retesting its post-intervention low against the dollar as the Iran war and US rate uncertainty bolster the greenback. Markets are watching verbal warnings about a possible new intervention by Japan's Ministry of Finance.
The dollar-yen pair climbed to the 161 level during Tokyo's Thursday session, just above the band where Japan's Ministry of Finance intervened last month. According to Nikkei Asia, the upward move reflects the Iran war pushing global oil prices higher and US rate uncertainty supporting the dollar. The yen remains the worst-performing major developed-market currency this year.
Japan's finance minister told reporters that "all measures are on the table when the market is excessively volatile." In the bond market, 10-year Japanese government bond yields rose above 2.6%, increasing tightening pressure on the Bank of Japan. Annual inflation in Japan is running at 3.2%.
Analysts say pressure on the yen could ease partially if the BOJ signals a rate hike at its June meeting. Some commentators argue, however, that structural yen weakness will persist unless the gap with US rates narrows, with intervention only providing temporary relief. Investors are awaiting Japan's first-quarter GDP data due Friday.
More from Asia
Trump Says Xi Offered Help on Iran as China Seeks to Keep Hormuz Open
After the Beijing summit, Donald Trump said Xi Jinping offered help on the Iran file, with China stressing its interest in keeping the Strait of Hormuz open. The strait carries about one-fifth of global oil flows.
Explosion at China fireworks factory kills 26 people
An explosion at a fireworks factory in Hunan province, China, killed 26 people and injured 61, according to state media reports.
China scraps tariffs for all but one African nation
China announced it has scrapped tariffs for almost all African nations. This move boosts China's soft power in African states, but may also deepen economic inequalities.