Yen Rallies on Hopes for US, Iran Diplomacy and BoJ Rate Outlook Shifts

The Japanese yen has edged higher against the US dollar as oil prices slide on renewed hopes of diplomacy between the US and Iran.

An Iranian official stated that a proposal was delivered to the US via mediators on September 16, aiming to reopen the Strait of Hormuz within seven days if the US takes initial steps to ease military pressure.

The plans for Saudi Arabia to resume crude exports from Yanbu as early as Tuesday and restart the East-West oil pipeline have added to supply hopes, supporting oil-importing currencies such as the yen.

The Bank of Japan's expected further interest-rate rises this year has also contributed to the yen's gain. Economists now project benchmark interest rates could climb toward 1.0% in the coming cycles.