Yen Weakens Amid Oil Price Surge and Rising US Interest Rates
The Japanese yen has weakened against the US dollar in Tokyo foreign exchange trading, settling in the lower 160 range. Rising crude oil prices and higher US interest rates are driving the decline of the yen.
Rising crude oil prices have surged more than 5% from the previous day, with the October contract for West Texas Intermediate (WTI) closing above $90 a barrel. The surge in oil prices is attributed to deteriorating conditions in the Middle East, following US airstrikes against Iran and President Trump's warning of harsher attacks if Iran retaliates.
The yen has also been affected by higher US interest rates, with the benchmark 10-year UST yield settling at 4.80% on August 1st, its highest level since January 2025. The view that the US-Japan interest rate differential will not narrow is encouraging yen-selling and dollar-buying.