The Japanese yen weakened toward 162.5 per dollar on Wednesday, sliding back toward 40-year lows as the US dollar gained on renewed safe-haven demand after fresh US air strikes on Iran in response to recent attacks on ships transiting the Strait of Hormuz.
The escalation pushed oil prices higher, reigniting inflation concerns and adding pressure on Japan’s economy and currency due to the country’s heavy reliance on Middle Eastern oil imports.
Meanwhile, traders continued to bet against the yen amid the lack of intervention from Japanese authorities.
Even so, markets remained alert for any move by Tokyo to support the currency, though many investors doubted that intervention alone would deliver lasting relief.
Finance Minister Satsuki Katayama recently reiterated that officials are prepared to intervene in the foreign exchange market when necessary, adding that Japan and the US remain in close communication on currency policy.