Yen Rises to Seven-Month High as Oil Prices Surge and Dollar Weakens
The Japanese yen has reached a seven-month high, putting pressure on the US dollar as oil prices approach $100 a barrel and renewed Middle East fighting increases inflation risks.
The yen's strength is driven by expectations of faster Bank of Japan tightening, repatriation of overseas funds by Japanese investors, and pressure from Washington for a stronger yen. The pair was around 153.65, with the yen gaining about 4% in September.
Oil prices rose 1.5% to $99.37 a barrel as the conflict in the Middle East widens, with Iranian-backed Houthis striking several Saudi cities and US forces hitting multiple Iranian oil tankers. The fighting has lasted more than six months, raising concerns over disruptions to energy supplies.
The dollar's weakness is also linked to the yen's rapid rise, with traders awaiting Friday's U.S. inflation report and next week's Federal Reserve and Bank of Japan meetings for further guidance.