The Japanese yen weakened toward 159 per dollar on Tuesday, remaining under pressure amid heightened uncertainty over the Bank of Japan’s policy path. According to reports, the central bank is likely to leave interest rates unchanged this month while it assesses the economic impact of the conflict in the Middle East, though it may signal a potential resumption of policy normalization as early as June.
The BOJ is also expected to raise its inflation forecasts while lowering its growth projections, reflecting higher energy costs and broader headwinds stemming from the war involving Iran. At the same time, markets are closely watching US-Iran peace talks, with both sides expected to send delegations to Islamabad for a second round of negotiations before the current ceasefire expires.
Oil prices and the US dollar have both eased, offering some support to the yen, particularly in light of Japan’s heavy reliance on energy imports from the Middle East.
