Japanese Yen Depreciation | UBS: If oil supply continues to be disrupted, the Yen could reach 175 by the end of the year

SighingCashier · 2026-04-02T03:45:49+00:00

The Japanese yen has recently been weak. UBS predicts that if oil supplies are disrupted, it could depreciate to 175 yen per US dollar within the year. Even if Japanese officials increase intervention, the yen's depreciation trend remains unchanged, and the market will rely on fiscal measures to address inflation. After Trump's remarks, the yen came under further pressure, falling to 159.402 against the US dollar.

SighingCashier

2026-04-02 03:45:49

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The yen exchange rate has been weak recently. UBS strategists said that even if Japanese officials step up their verbal intervention, the yen’s downward trend is still expected to continue. They also said that if oil supplies continue to be disrupted, the yen could fall to the 175 level by the end of the year.

UBS noted that if oil prices rise toward $150 per barrel, attempting to curb inflation by lowering the exchange rate through intervention could instead give the market an opportunity to sell the yen on rallies. The result would consume foreign exchange reserves, but it may not necessarily be able to change the yen’s depreciation trend. Controlling inflation or doing more would rely on fiscal measures instead, such as energy subsidies.

UBS believes that in this situation, the market may conclude that, in a global stagflation environment, Japan’s policymakers have no intention of halting the yen’s depreciation. Accordingly, the impact would drive the yen significantly lower.

Last Monday, the yen against the U.S. dollar briefly broke below the 160 level for the first time since 2024. Jun Mimura, the Deputy Minister for International Affairs at Japan’s Ministry of Finance, warned that it would take “bold” action. Bank of Japan Governor Kazuo Ueda also reiterated that exchange-rate volatility has a major impact on the economy and prices. Japan’s Finance Minister Akinuki Katayama also emphasized that it is fully prepared to deal with exchange-rate volatility in every way.

U.S. President Trump earlier delivered a nationwide address, saying that U.S. forces in the conflict with Iran had achieved rapid, decisive, overwhelming victory, and that they were quickly winding down as scheduled. He also said that in the next two to three weeks, extremely harsh strikes would be carried out against Iran.

After Trump’s speech, the dollar rose, putting pressure on the yen. The latest yen exchange rate stands at 159.402 yen per U.S. dollar, down 0.46%.

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