The Japanese yen declined in the Asian market on Monday against a basket of major and secondary currencies, moving further away from its three-month highs against the US dollar and trading in negative territory as investors focused on buying the US currency as the best alternative investment amid fears of a renewed Iranian war, especially after the United States rejected Irans response to the American peace proposal.

With global oil prices rising, concerns are resurfacing about mounting inflationary pressures on policymakers at the Bank of Japan, which could push them toward raising interest rates in the near term, pending the release of more data on developments in the worlds fourth-largest economy.

Price Overview

Japanese yen exchange rate today: The dollar rose against the yen by about 0.35% to 157.17, from the opening level of 156.65, and recorded a low of 156.52.

The yen ended Fridays trading up by 0.15% against the dollar, resuming gains that had paused the previous day amid correction and profit-taking operations from the three-month high of 155.03.

The yen also posted a weekly gain of 0.25% against the dollar last week, marking its second consecutive weekly gain, supported by speculation about further intervention by Japanese monetary authorities in the currency market to support the local currency.

The US dollar

The dollar index rose on Monday by about 0.3%, resuming gains that had paused on Friday and reflecting stronger levels of the US currency against a basket of global currencies.

This rise comes amid safe-haven buying of the US currency due to fears of renewed military confrontations between the United States and Iran, especially after Tehran rejected the US peace proposal.

US-Iran negotiations stall

On the Truth Social platform, US President Donald Trump announced his complete rejection of the Iranian response delivered through the Pakistani mediator, saying: I just read the response from the so-called representatives of Iran I do not like it totally unacceptable.

The Iranian proposal included ending the war on all fronts, including Lebanon, lifting the US naval blockade on Iranian ports, allowing Iranian administration of the Strait of Hormuz, and obtaining war reparations in exchange for later negotiations regarding the nuclear file.

Iranian President Masoud Pezeshkian struck a defiant tone, stressing that his country will not bow its head to the enemy, and that entering negotiations does not mean surrendering to Trumps greed.

Israeli Prime Minister Benjamin Netanyahu said in a television interview that the war is still ongoing because there is more work to do to finish it.

Global oil prices

Global oil prices jumped by more than 5% on Monday at the start of weekly trading, heading toward their highest levels in several weeks amid fears that the Strait of Hormuz will remain closed and oil supplies disrupted.

There is no doubt that rising global oil prices are reviving concerns about accelerating inflation, which could push global central banks toward raising interest rates in the near term, marking a sharp shift from pre-war expectations of interest rate cuts or prolonged stability.

Japanese interest rates

Following the rise in oil prices, pricing for the probability of the Bank of Japan raising interest rates by a quarter percentage point at the June meeting increased from 55% to 60%.

In order to reprice those probabilities, investors are awaiting the release of more data on inflation, unemployment, and wage levels in Japan.