The Japanese yen declined in Asian markets on Monday against a basket of major and minor currencies, resuming its losses against the US dollar and nearing a trading loss below 160 yen, as investors focused on buying the US currency as the best alternative investment amid escalating fears of an Iranian war, while awaiting the final deadline set by US President Donald Trump for reopening the Strait of Hormuz.
With inflationary pressures easing on monetary policymakers at the Bank of Japan, the likelihood of a Japanese interest rate hike this April has decreased, pending the release of further economic data in Japan.
Price overview
Today's Japanese Yen exchange rate: The dollar rose against the yen by 0.2% to (159.83¥), from Friday's closing price of (159.51¥), and recorded a low level during today's trading at (159.47¥).
The yen ended Friday's trading up less than 0.1% against the dollar, its first loss in three days, amid fresh warnings from Japan's finance minister about excessive currency movements in the foreign exchange market.
Thanks to continued warnings from Japanese monetary authorities, the yen gained 0.45% against the dollar last week, its second weekly gain in the last three weeks.
The US dollar index rose more than 0.1% on Monday, maintaining its gains for the third consecutive session, reflecting the continued rise in the levels of the US currency against a basket of global currencies.
This rise is due to investors focusing on buying the US dollar as the best alternative investment, amid escalating fears of an Iranian war, especially after the recent threats by US President Donald Trump.
Developments in the Iranian war
Trump vows that Iran will live in hell by Tuesday if the deadline for opening the Strait of Hormuz is not met.
Axios: Iranian mediators are making a last-ditch effort to secure a 45-day ceasefire.
Axios: Sources report that the chances of reaching a partial agreement within the next 48 hours are slim.
Japanese authorities
Japan’s Finance Minister, Satsuki Katayama, issued a fresh warning to currency traders on Friday, stressing the government’s readiness to take action against speculation in foreign exchange markets, given the significant increase in volatility recently.
Katayama said at a regular press conference: We are seeing an increase in speculation in both the crude oil futures markets and the foreign exchange markets, and volatility has increased significantly.
Katayama added: “Since the exchange rate fluctuations resulting from these developments affect the livelihoods and economy of citizens, we are fully prepared to respond comprehensively on all levels.”
Japanese interest rate
Data released last week in Japan showed that core inflation in Tokyo slowed during March, in the latest indication of easing inflationary pressures on monetary policymakers at the Bank of Japan.
Following that data, the pricing of the probability of the Bank of Japan raising interest rates by a quarter of a percentage point at its April meeting fell from 25% to 15%.
In order to reprice those probabilities, investors are awaiting further data on inflation, unemployment and wage levels in Japan.
