FX.co ★ Yen Edges Up as Dollar, Oil Prices Retreat

The Japanese yen strengthened to around 163.5 per dollar on Monday, supported by a pullback in both the US dollar and oil prices after the United States and Iran halted reciprocal strikes over the weekend amid renewed diplomatic efforts. Japan’s heavy reliance on oil imports from the Middle East continues to leave its economy vulnerable to supply disruptions and sharp fluctuations in crude prices. Domestically, public support for Prime Minister Sanae Takaichi has slipped, as government measures to curb inflation have fallen short of household expectations. Despite the latest gains, the yen remains near its weakest levels in roughly 40 years, with repeated warnings of potential market intervention failing to stem the currency’s slide. Traders have also largely shrugged off comments from Japan’s finance minister that authorities stand ready to take decisive action in the foreign exchange market if needed, as well as reports that Bank of Japan officials are open to raising interest rates more quickly than current market pricing implies.