The Japanese yen weakens due to oil spike, impacting trade balance and inflation

From Yahoo Finance: 2025-06-23 04:58:00

The Japanese yen has dropped against the U.S. dollar and Swiss franc due to missile attacks on Iranian targets. Japan’s oil imports could worsen its trade balance, affecting the yen’s appeal. Speculative positioning suggests a shift towards a weaker yen, impacting Japanese stocks and potentially inflation ahead of elections.

A weaker yen benefits Japanese exporters but may lead to higher manufacturing costs. The government faces challenges with inflation and rising prices, affecting public opinion ahead of elections. Analysts forecast the yen to weaken further to 150 per dollar by September, compounded by the Bank of Japan’s dovish stance.

Rising crude oil prices are detrimental to Japan’s trade balance and terms of trade, weakening the yen. Citi analysts predict the yen to reach 150 per dollar by September. The Bank of Japan’s dovish stance could amplify the downward pressure on the yen from oil’s rally.

Read more: Japan’s yen sinks as spike in crude oil overpowers safe-haven appeal