The Japanese yen weakened against a basket of major and minor currencies during Asian trading on Wednesday, extending losses for a third consecutive session against the US dollar and falling to its lowest level since 1986, as concerns over the widening gap in long-term bond yields between Japan and the United States continued to weigh on the currency.

The yen’s slide to fresh four-decade lows has intensified speculation that Japanese authorities could step into the foreign exchange market to support the currency. Traders increasingly believe any intervention could take place during the upcoming US market holiday on Friday, when thinner liquidity conditions may amplify its impact.

The Price

• The US dollar rose 0.2% against the Japanese yen to ¥162.84, the highest level since December 1986, after opening at ¥162.52. The session low was recorded at ¥162.49.

• The yen closed Tuesday down 0.35% against the dollar, marking its second consecutive daily decline, pressured by rising yields on US 10-year Treasury notes.

• Over the course of June, the yen lost 2.1% against the US dollar, posting a second straight monthly decline as markets continued to react to the Federal Reserve’s hawkish outlook.

US Dollar

The US Dollar Index climbed 0.2% on Wednesday, holding onto gains for a second consecutive session and reflecting continued strength in the greenback against a basket of global currencies.

The dollar has been supported by the recent rise in long-term US Treasury yields, particularly after key labor market data reinforced expectations that the Federal Reserve could raise interest rates at least once more this year.

Markets are now closely watching comments later today from Federal Reserve Chair Kevin Warsh at the European Central Bank Forum in Sintra, Portugal, for further clues on the outlook for US monetary policy.

Japanese authorities

Japanese Finance Minister Satsuki Katayama reiterated that the government is prepared to take appropriate action against excessive currency volatility.

Katayama added that this includes decisive measures agreed upon between Japan and the United States.

Market views

• Chidu Narayanan, head of Asia-Pacific macro strategy at Wells Fargo, said another intervention remains a possibility: “We believe we are approaching a point where action becomes increasingly likely.”

• Narayanan added that current levels are critical, not necessarily because of a specific exchange rate target, but because authorities may need to intervene to maintain credibility.

• Traders view Friday’s US holiday as a potential opportunity for Japanese authorities to buy yen, as lower liquidity could magnify the impact of any intervention and reduce its overall cost.

• Matt Simpson, senior market analyst at StoneX, said Japan’s Ministry of Finance may want to intervene but faces a difficult challenge while fighting against a hawkish Federal Reserve backdrop.

• Simpson added that if upcoming US economic data unexpectedly weakens and boosts expectations for monetary easing, Japanese authorities could take advantage of a softer dollar environment to intervene more aggressively. Until then, intervention threats are likely to remain largely verbal.

Japanese interest rates

• Market pricing for a 25-basis-point interest rate hike by the Bank of Japan at its July meeting remains below 25%.

• Investors are awaiting additional data on inflation, wages, and unemployment in Japan to reassess the likelihood of further policy tightening.

Soybean and grain futures on the Chicago Board of Trade traded slightly higher on Tuesday as traders adjusted positions ahead of the US Department of Agriculture’s quarterly grain stocks report while continuing to monitor weather conditions across the US Midwest.

The most active soybean contract on the CBOT rose 0.04% to $11.39½ per bushel as of 08:28 GMT, while corn gained 0.37% to $4.11¾ per bushel.

Wheat futures also advanced 0.82% to $5.84¼ per bushel.

The USDA’s quarterly grain stocks report, due later in the day, is expected to provide fresh insight into supply prospects for the upcoming corn and soybean marketing season.

Analysts, on average, expect the USDA to lower its estimate for corn planting acreage while increasing its forecast for soybean acreage.

A wave of hot weather sweeping across large parts of the US Midwest this week is also expected to add stress to crops and support prices, although forecasts for rainfall later in the week and cooler temperatures could help limit potential damage.

Soybean and corn prices have faced pressure from declining crude oil prices because both crops are used in biofuel production, while wheat has been weighed down by the ongoing harvest in the US Plains and abundant global supplies.

In its weekly crop progress report released on Monday, the USDA rated 67% of the US corn crop and 65% of the soybean crop as being in “good-to-excellent” condition, each down one percentage point from the previous week and below market expectations.

Winter wheat ratings were unchanged at 26% good-to-excellent, while harvest progress lagged expectations, reaching 48% completion compared with forecasts of 54%.

Traders said commodity funds were net sellers of corn, soybean, and wheat futures on the Chicago Board of Trade on Monday.

Gold prices fell on Tuesday and remained on track for their steepest quarterly decline in 13 years, as persistent inflation concerns linked to the Middle East conflict reinforced expectations that the Federal Reserve could keep monetary policy tighter for longer.

Spot gold slipped 0.2% to $4,008.94 per ounce after touching its lowest level since November earlier in the session. Prices have fallen 11.3% since the start of June.

Meanwhile, August gold futures declined 0.4% to $4,022.70 per ounce.

The precious metal is on course for its first quarterly loss since 2024 and its largest quarterly decline since the second quarter of 2013.

Although gold is traditionally viewed as a hedge against inflation, higher interest rates tend to weigh on the non-yielding asset by increasing the appeal of interest-bearing investments.

“Markets are somewhat concerned about how stable the memorandum of understanding really is, and gold is under pressure because investors are not seeing much light at the end of the tunnel,” said Edward Meir, analyst at Marex.

Senior US envoys arrived in Doha, but a Qatari official said there would be no high-level meeting with Iran, raising doubts about progress toward a lasting end to the Iran conflict.

Higher-for-longer outlook

At the same time, US inflation remains stubbornly elevated and well above the Federal Reserve’s 2% target.

Meir said markets increasingly expect interest rates to remain higher for longer, with the possibility of additional tightening, a backdrop that continues to pressure gold prices.

Traders are currently pricing in roughly a 65% probability of a Federal Reserve rate hike in September, according to the CME FedWatch Tool.

Investors are now awaiting ADP private-sector employment data on Wednesday and the US nonfarm payrolls report on Thursday for further clues about the Fed’s policy path.

In a separate development, a survey conducted by the Official Monetary and Financial Institutions Forum showed that central banks are becoming more inclined to reduce their exposure to the US dollar over the next decade due to rising geopolitical concerns, while increasing their gold holdings in the near term.

Among other precious metals, spot silver fell 0.8% to $58.2585 per ounce and is heading for its worst quarterly performance since the first quarter of 2020.

Platinum declined 0.7% to $1,564.34 per ounce, while palladium edged up 0.2% to $1,215.94 per ounce.

Both platinum and palladium remain on track to post monthly and quarterly losses.

Although the United States and Iran have stepped back from the brink of a full-scale war, the ceasefire that followed nearly four months of fighting continues to face pressure amid renewed tensions surrounding the Strait of Hormuz. One consequence of the crisis, however, has already become clear: the shift toward clean energy is accelerating, and there are few signs that it will slow down.

The latest conflict is only the newest in a series of disruptions that have shaken global oil and gas markets in recent years, prompting governments around the world to reassess their dependence on imported fossil fuels and highlighting the energy security benefits offered by solar power.

No region was more exposed to a closure of the Strait of Hormuz than Asia. Before the United States and Israel launched their joint military campaign against Iran on February 28, roughly one-fifth of global oil and gas trade passed through the strait each day, moving eastward from the Gulf.

Of the approximately 20 million barrels of oil and petroleum products that flowed through the waterway daily before the conflict, around 80% of the oil and 90% of the natural gas was destined for Asian markets.

When the strait was closed in response to the military campaign, Asian economies were among the first and hardest hit as energy supplies were disrupted. Southeast Asia proved particularly vulnerable because of its heavy reliance on imported energy and its limited ability to absorb major price shocks.

The consequences were not merely theoretical. The Philippines declared a national energy emergency in March, while governments across the region adopted measures ranging from energy rationing and remote work policies to four-day workweeks in an effort to ease the strain.

Yet the same crisis also triggered a long-awaited renewable energy boom that could ultimately leave the region more secure, more independent, and better positioned to control its own energy future.

Rooftop solar systems are expanding rapidly across countries such as the Philippines, Indonesia, Cambodia, and Malaysia, as households and businesses search for alternatives amid rising energy costs and growing concerns over grid reliability.

The trend reflects a broader shift in how governments view energy security. Historically, fossil fuels were considered the most dependable source of power, while solar and wind energy were often viewed as less reliable because of variable output and relatively immature supply chains.

That perception is now changing.

After months of energy disruptions linked to the Strait of Hormuz, renewable energy is increasingly being viewed as the more resilient option and one that is less vulnerable to geopolitical risks.

David Frykman, general partner at Swedish venture capital firm Norrsken, wrote in an opinion article for Fortune: “Solar and wind power cannot be embargoed, blockaded, or cut off by a foreign power. Every terawatt-hour of domestic renewable energy is a terawatt-hour that no adversary can weaponize.”

Oil and gas must be sourced from countries with large natural reserves, creating geopolitical chokepoints such as the Strait of Hormuz. Solar and wind power, by contrast, are far more decentralized and can be generated in varying degrees across most regions where people live.

Beyond these strategic advantages, solar energy has also become the world’s cheapest source of electricity, making the transition toward renewables both an economic and political necessity for countries such as Indonesia and the Philippines, which have already felt the consequences of heavy dependence on imported energy.

The discussion is no longer solely about climate change. Solar power is increasingly viewed as a practical solution from both an economic and geopolitical perspective.

As Forbes previously noted, “For years, clean energy was framed as a moral imperative. Now it is simply an economic and geopolitical necessity. This is not just about emissions; it is about resilience and price stability.”

The transformation is likely to do more than shield Southeast Asian energy systems from volatility in global fuel markets. It could also reshape influence within the global energy sector, shifting part of that power toward China.

China’s dominant position across renewable energy manufacturing and supply chains places it in a strong position to become an increasingly indispensable trading partner for emerging economies pursuing energy independence.

The Philippines offers one of the clearest examples. The country has become the second-largest destination for Chinese solar exports this year, behind only the Netherlands and ahead of Pakistan, traditionally one of the largest buyers of Chinese solar equipment.

According to energy think tank Ember, Chinese solar panel shipments to the Philippines exceeded 4,000 megawatts during the first four months of 2026 alone.