The yen extended its decline in the low ¥158 range. Higher oil prices and political instability in France weighed on the currency, and the yen was expected to test ¥159 from the 19th onward.
In the Tokyo foreign exchange market on the 19th, the yen stood at around ¥158.16 per dollar, about 16 sen weaker against the previous weekend. Concerns over persistently high oil prices and a widening Japanese trade deficit, along with euro selling by European investors prompted by political instability in France, encouraged dollar buying, with yen selling also prevailing.
In the U.S. crude oil futures market, the nearest-month WTI contract ended about 3% higher than the previous day, in the ¥101-per-barrel range. On the 19th, NY crude oil rose further and settled at $103.66. The view was expressed that the yen was likely to remain under selling pressure amid expectations that tensions in the Middle East would persist.
Renewed concerns over intensifying demonstrations in France and the country's fiscal management and political situation led to euro selling and dollar buying by European investors. Although the yen strengthened against the euro, the euro fell against the dollar for the first time in four trading days. The yen also saw periods of strengthening against the euro.
Bank of Japan Governor Ueda (植田) expressed the view that the underlying inflation rate was close to 2% and stressed that confidence in monetary policy was directly linked to stability in the bond market. Yen buying led at times in the morning, but after the decline in equities, yen selling resumed.
Market attention was focused on the timing of additional BOJ rate hikes and movements in long-term U.S. interest rates, with some market participants saying the dollar/yen pair could test the ¥159 range. At the same time, the view remained that continued high oil prices could worsen the trade balance and encourage yen selling.