The USD-JPY exchange rate rose on the Tokyo foreign exchange market on July 13, climbing 0.19% from the previous session to trade at 162.031 yen as of 1:46 PM, according to Yonhap Infomax. The yen weakened as geopolitical risk-driven dollar buying intensified following renewed escalation in tensions between the United States and Iran. Iranian media reported on the 12th (local time) that the Iranian Revolutionary Guard declared the re-closure of the Strait of Hormuz, while the US Central Command announced via X (formerly Twitter) that it had launched additional attacks on Iran, raising concerns over oil supply disruptions and Japan's energy-import-dependent trade balance.
USD-JPY Climbs to 162.031 Yen on Geopolitical Dollar Demand
The USD-JPY exchange rate rose from the start of the trading session and maintained yen weakness throughout. The exchange rate touched 162.150 yen at one point during the session, according to Yonhap Infomax data.
Iran Declares Strait of Hormuz Re-Closure, US Launches Additional Attacks
Iranian media reported on the 12th (local time) that the Iranian Revolutionary Guard declared the re-closure of the Strait of Hormuz. The US Central Command announced via X (formerly Twitter) that it had launched additional attacks on Iran. Tensions in the Middle East escalated again, spreading concerns over oil supply disruptions.
WTI Crude Surges Over 4% Intraday, Japan Trade Balance Concerns Mount
West Texas Intermediate (WTI) crude oil futures rose more than 4% intraday in Asian markets, surging to the mid-$74 per barrel range at one point. Concerns that Japan's trade balance could deteriorate due to the country's high dependence on energy imports fueled yen selling and dollar buying.
GPIF Asset Allocation Expectations and Importer Demand Weaken Yen Further
Japanese government bond (JGB) yields fell amid expectations of changes in the Government Pension Investment Fund (GPIF) asset allocation ratio, contributing to yen weakness. Additionally, yen selling and dollar buying orders centered on Japanese import companies flowed into the market, acting as a burden on the yen.
Intervention Concerns Cap USD-JPY Rally at 162 Yen Level
The USD-JPY exchange rate appeared capped in the early 162 yen range. As the yen re-entered the 162 yen level, caution persisted that the Japanese government and the Bank of Japan (BOJ) could intervene with yen-buying operations.
EUR-JPY, EUR-USD, and Dollar Index Movements
The EUR-JPY exchange rate rose 0.08% from the previous session to 184.73 yen. The EUR-USD exchange rate fell 0.11% to 1.14011 dollars. The Dollar Index jumped 0.14% to 101.097.
FAQ
What caused the USD-JPY exchange rate to rise on July 13?
The USD-JPY exchange rate rose 0.19% to 162.031 yen on July 13 due to geopolitical risk-driven dollar buying following renewed tensions between the United States and Iran, including Iran's declared re-closure of the Strait of Hormuz and US additional attacks on Iran.
How did oil prices react to the Iran-US tensions?
West Texas Intermediate (WTI) crude oil futures surged more than 4% intraday in Asian markets, reaching the mid-$74 per barrel range at one point, as concerns over oil supply disruptions spread due to escalating Middle East tensions.
Why did concerns about Japan's trade balance affect the yen?
Japan's high dependence on energy imports raised concerns that rising oil prices could worsen the country's trade balance, prompting market participants to sell yen and buy dollars.
