The Japanese Yen (JPY) extended its decline against the US Dollar (USD), with the USD/JPY pair trading around 159.80 during Asian hours on Monday, marking its third consecutive day of gains for the US Dollar [1]. This movement was driven by increased safe-haven demand for the USD after United States–Iran talks ended without a deal, as confirmed by Vice President JD Vance following 21 hours of negotiations in Islamabad [1]. US President Donald Trump announced that the US would begin 'blockading' all ships entering or leaving the Strait of Hormuz, and US Central Command (CENTCOM) stated that forces will start blockading all maritime traffic entering and exiting Iranian ports at 10 AM ET (14:00 GMT) on Monday [1].
Iran’s Parliament Speaker Mohammad Bagher Ghalibaf noted that despite 'constructive initiatives,' the US failed to gain the Iranian delegation’s trust, leaving the decision with Washington [1]. Iran’s Revolutionary Guard (IRGC) warned that any military vessels approaching the Strait of Hormuz would violate the ceasefire and face a decisive response [1].
Market participants are now awaiting the Bank of Japan’s April 27–28 meeting, where policymakers will assess whether rising global energy and commodity prices warrant a rate hike [1]. The Sakura Report indicated that board members are balancing upside inflation risks against downside growth risks, with all nine regions reporting their economies as either 'recovering moderately,' 'picking up,' or 'picking up moderately' [1].
The Yen’s value is influenced by the Bank of Japan’s policy decisions, the differential between Japanese and US bond yields, and risk sentiment among traders. The BoJ’s ultra-loose monetary policy between 2013 and 2024 led to Yen depreciation against major currencies, but recent gradual unwinding of this policy has provided some support to the Yen [1].
CONCLUSION
The collapse of US–Iran talks and subsequent US blockade announcement have triggered a sharp rise in the US Dollar and a fall in the Japanese Yen, with USD/JPY trading near 159.80. Market focus now shifts to the upcoming Bank of Japan meeting, where policymakers will weigh inflation and growth risks. The heightened geopolitical tensions and central bank decisions are expected to drive further volatility in currency markets.