FX.co ★ Yen Hovers Near 40-Year Lows

The Japanese yen weakened toward 162.5 per dollar on Friday, hovering near its lowest level in four decades as investors saw little indication of decisive support from Tokyo. A recent report also signaled that Japan has no immediate plans to change the asset allocation of its state pension funds, dampening expectations for near-term backing of domestic financial markets.

Market participants are now awaiting intervention data due later this month to determine whether Japanese authorities were behind the sharp but short-lived yen rallies seen in recent weeks. The currency also remained under pressure from this week’s steep rise in oil prices, fueled by escalating tensions between the US and Iran that have effectively unraveled the interim peace agreement.

Given Japan’s heavy reliance on energy imports from the Middle East, the country remains especially exposed to potential disruptions in regional energy supplies.