The Japanese yen strengthened past 159 per dollar on Monday, rebounding from three-week lows as falling oil prices and a softer US dollar lent support to the currency. The move came amid signs that the US and Iran were edging closer to an agreement that could lead to a reopening of the Strait of Hormuz. A full reopening of this critical shipping lane would provide significant relief to major Asian economies that are heavily dependent on oil imports from the Middle East.
On the domestic front, data released last week showed that Japan’s core inflation rate eased to a four-year low in April, easing immediate pressure on the Bank of Japan to tighten monetary policy. Nonetheless, the central bank may still contemplate future rate hikes as the Japanese economy continues to demonstrate resilience.
At the same time, traders remained wary of potential currency intervention, with the yen still hovering near the 160-per-dollar level that reportedly triggered intervention by Tokyo authorities in late April and early May.
