2026.07.1301:33:41UTC+00Yen Weakens on Middle East Tensions

The Japanese yen weakened to around 162 per dollar on Monday, erasing the previous session’s gains as mounting tensions in the Middle East weighed on the currency. Over the weekend, the US and Iran carried out fresh missile strikes amid ongoing disputes over shipping in the Strait of Hormuz, pushing oil prices higher and strengthening expectations of interest-rate hikes to contain inflation.

Japan’s economy and currency are particularly vulnerable to rising oil prices, given the country’s heavy dependence on crude imports from the Middle East. The yen also came under additional pressure from a stronger US dollar, which continued to benefit from safe-haven demand amid the geopolitical turmoil.

Last Friday, the yen had rallied after Finance Minister Satsuki Katayama said the government would urge domestic pension funds to increase their allocations to Japanese financial assets.