Japanese Yen falls as US Dollar rises after US–Iran talks collapse
- USD/JPY appreciates as the US Dollar gains on increased risk aversion.
- US Vice President JD Vance confirmed US–Iran talks ended without a deal after 21 hours in Islamabad.
- CENTCOM said forces will begin blockading all maritime traffic to and from Iranian ports at 10 AM ET Monday.
USD/JPY extends its winning streak for the third successive day, trading around 159.80 during the Asian hours on Monday. The pair strengthens as the US Dollar (USD) gains on safe-haven demand after Vice President JD Vance confirmed United States (US)–Iran talks ended without a deal following 21 hours of negotiations in Islamabad.
US President Donald Trump said the US would begin “blockading” all ships entering or leaving the Strait of Hormuz. The US Central Command (CENTCOM) said forces will begin blockading all maritime traffic entering and exiting Iranian ports at 10 AM ET (14:00 GMT) on Monday.
Iran’s Parliament Speaker Mohammad Bagher Ghalibaf said despite “constructive initiatives,” the US failed to gain the Iranian delegation’s trust, leaving the decision with Washington. Iran’s Revolutionary Guard (IRGC) warned that any military vessels approaching the Strait of Hormuz would violate the ceasefire and face a decisive response.
Traders await the Bank of Japan’s April 27–28 meeting, where policymakers will assess whether rising global energy and commodity prices warrant a rate hike. The Sakura Report showed board members balancing upside inflation risks against downside growth risks following the April 6 branch managers’ meeting. All nine regions maintained that their economies were either “recovering moderately,” “picking up,” or “picking up moderately.”
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
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