【Japanese Yen Trend】The Japanese Yen against the Hong Kong dollar stands at 4.91. UBS warns: If oil supply remains disrupted and pushes up oil prices, the Yen against the US dollar could depreciate to 175 by the end of the year.

The Japanese yen to the U.S. dollar continues to hover around 159, and it is quoting 4.917 Hong Kong dollars per 100 yen. An UBS strategist has released the latest research report stating that even if Japanese officials have recently repeatedly used “verbal intervention” to manage exchange rates, it is still difficult to stop the yen’s downward trend. If the war in the Middle East causes oil supplies to remain disrupted and keeps pushing international oil prices toward $150 per barrel, the yen’s exchange rate against the dollar by the end of 2026 may not rule out a further slide to the historical low of 175.

The strategist emphasized that higher oil prices would deliver a double blow to Japan’s economy, which is highly dependent on energy imports. If a surge in oil prices triggers imported inflation, the Japanese authorities’ efforts to curb inflation by intervening in exchange rates may backfire—providing the market with an excellent opportunity to “sell the yen on rallies.” Not only could it lead to Japan’s foreign-exchange reserves being consumed for nothing, but without a change in the fundamentals, it may not be able to effectively reverse the yen’s long-term depreciation trend.

Market participants noted that due to the Iran war disrupting shipping through the Strait of Hormuz, the global energy supply chain is in an extremely tight condition. At the same time, the interest-rate spread between the United States and Japan remains significant, keeping carry trades pressing down on the yen. If, in the second half of 2026, inflation expectations rise again due to runaway energy costs, the Bank of Japan’s hesitation in shifting monetary policy will expose the yen to even more severe selling pressure.

		Finance Hot Talk
	





	Could the U.S.-Iran conflict turn into a long-lasting war? Is the market underestimating the risk of a global economic recession?