Why hasn't the Japanese yen been bought amid the tense situation in the Middle East?

With tensions in the Middle East escalating, the yen’s depreciation is intensifying. As concerns grow that higher crude oil prices could widen Japan’s trade balance deficit, the once-common phenomenon of “buying yen when there are problems” is no longer in place. Market attention is focused on the “yen depreciation of the 2022 type” stemming from Russia’s invasion of Ukraine. More and more views hold that buying the U.S. dollar in extraordinary times, along with rising energy prices, will accelerate the sell-off of the yen.

“With concerns that a surge in oil prices is being driven by the Strait of Hormuz being blocked, there’s no atmosphere of actively buying yen,” an FX broker at a Japanese domestic bank explains the mood in the foreign exchange market since the beginning of this week.

On March 3, in the London foreign exchange market, the yen against the U.S. dollar slid at one point into the 1 USD = 157.90 yen range, reaching the lowest level since February 9. It closed last weekend at around 156 yen. The yen against the Swiss franc fell for 2 days to about 203 yen per 1 Swiss franc, also hitting the lowest level. Against the Australian dollar, it fell for 3 days to a new low since 1990 as well.

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The Nihon Keizai Shimbun and the Financial Times merged in November 2015 into the same media group. The alliance formed by the two newspaper companies—both launched in the 19th century as well—of Japan and the United Kingdom is moving forward with wide-ranging collaboration, such as joint special features, under the banner of “high-quality, the strongest economic journalism.” This time, as part of this effort, the two newspapers’ Chinese-language websites have exchanged articles between them.