The Japanese yen held near 159 per dollar on Friday, finding some support after a two-week US–Iran ceasefire led to a sharp drop in oil prices and eased stagflation fears. Attention is now turning to diplomatic talks in Islamabad this weekend, where US Vice President JD Vance will head a delegation for meetings with Iranian officials.
Still, sentiment remains cautious amid ongoing Israeli strikes in Lebanon and continued disruptions in the Strait of Hormuz, which threaten to destabilize the fragile truce. The yen is still down about 2% since the conflict began, underscoring concerns that higher energy costs stemming from the Iran war could stoke inflation while dampening Japan’s growth outlook.
Markets are closely monitoring comments from Bank of Japan Governor Kazuo Ueda ahead of the April 28 policy decision, especially after his guidance-style communication in the run-up to the last rate hike in December.
