Yen at three-week trough on Iran war updates

The Japanese yen fell in Asian trading on Tuesday against a basket of major and minor currencies, extending its losses for a seventh consecutive session against the US dollar and approaching its lowest level in three weeks, as investors assessed the latest developments surrounding the Iran war, particularly after Trump delayed a military strike on Iran following mediation efforts by major Gulf leaders.

Government data released in Tokyo today showed that Japan’s economy grew better than expected in the first quarter of this year, strengthening expectations that the Bank of Japan could raise interest rates when it meets in June.

Price overview

• Japanese yen exchange rate today: The dollar rose against the yen by 0.15% to ¥159.03, from today’s opening level of ¥158.79, while recording a session low of ¥158.71.

• The yen ended Monday trading down by less than 0.1% against the dollar, marking its sixth consecutive daily loss, and touched a three-week low of ¥159.08 amid fears of renewed conflict with Iran.

US dollar

The US Dollar Index rose 0.15% on Tuesday, resuming gains that paused temporarily yesterday and moving back toward a six-week high, reflecting renewed strength in the US currency against a basket of global currencies.

The dollar gained support from safe-haven demand, as market sentiment remains fragile despite President Donald Trump’s decision to delay a military strike on Iran following Gulf mediation efforts, while awaiting tangible progress in peace talks being conducted under Pakistani sponsorship.

Latest developments in the Iran war

• Trump stated on the Truth Social platform that he agreed to postpone the planned Tuesday attack on Iran following intensive contacts with Gulf leaders in order to grant the Pakistani mediation additional time.

• Trump instructed the Department of Defense (Pentagon) to remain on full alert and prepared to proceed with military action “from every direction” if negotiations fail.

• The White House insists that any final agreement must include a strict and fundamental condition preventing Iran entirely from obtaining a nuclear weapon.

• Tehran officially submitted an updated 14-point response to the US administration through the Pakistani mediator. Iran is demanding a long-term truce, international guarantees, and the lifting of the naval blockade.

• US officials said the new Iranian proposal is “insufficient and does not include meaningful improvements,” although Trump later described the ongoing negotiations as showing “very positive progress” following the decision to delay the strike.

• The United States is demanding a 20-year freeze on Iran’s nuclear program, while Tehran continues to reject the proposal.

New warnings

Japanese Finance Minister Satsuki Katayama told reporters on Monday that Japan remains ready to act against excessive volatility in the foreign exchange market at any time, while ensuring that any intervention to support the yen through dollar selling does not lead to higher US Treasury yields.

Japanese economy

Data released today in Tokyo showed that Japan’s economy expanded at an annualized rate of 2.3% in the first quarter of this year, beating market expectations for 1.7% growth, after the world’s fourth-largest economy recorded growth of 1.3% in the fourth quarter of last year.

Japanese interest rates

• Following the above data, markets increased pricing for the probability of a quarter-point interest rate hike by the Bank of Japan at its June meeting from 80% to 85%.

• Investors are awaiting additional data on inflation, unemployment, and wage growth in Japan to reassess those expectations further.