Yen weakens on Middle East jitters, falls to 160s versus dollar

2026-06-03

Yen briefly falls to 160s as Middle East tensions spur dollar buying

As uncertainty over the Middle East intensified, the yen fell against the dollar in Tokyo foreign exchange trading on the 3rd, briefly touching the 160s per dollar. The yen had last been in the 160s on April 30, nearly returning to levels seen before the government and the Bank of Japan stepped in to buy yen.

Dollar buying dominates in times of crisis

Tasnim News, which is close to Iran's Islamic Revolutionary Guard Corps, reported on the 1st that Iran's negotiating team had stopped talks with the United States through mediators and halted exchanges of documents. As hopes for an end to the fighting faded, WTI (West Texas Intermediate) crude futures, the global oil benchmark, rose into the 90-dollar range per barrel.

For Japan, which relies heavily on energy imports, expectations of a widening trade deficit tend to encourage yen selling. In addition, rising crude prices have revived inflation concerns in the United States, dampening expectations that the Federal Reserve will cut rates this year. With the widening gap between Japanese and U.S. interest rates also in focus, yen selling and dollar buying are gathering pace.

Gains after intervention erased

The government and the BOJ intervened to buy yen on April 30, sending the currency, which had been trading in the 160s before the intervention, as high as the mid-155 yen level at one point. In early May, there was also a stretch when the yen strengthened from the 157 level to the 155 level.

Since then, the yen has fallen about 5 yen from its post-intervention high, largely wiping out those gains. In the foreign exchange market, some are also growing wary of the possibility of another intervention.

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