TOKYO — The US dollar traded near a 10-month high Monday as the effective closure of the Strait of Hormuz pushed oil prices sharply higher and drove fresh selling in the yen. Safe-haven demand favored the greenback while Japan’s dependence on imported energy magnified the inflation hit from higher crude prices, March 30.
The move was visible across major currency pairs. According to Reuters market reporting, the dollar index rose to 100.28 and remained close to its March peak of 100.54, its highest since May 2025, while dollar-yen touched 160.47 before easing back. Tokyo answered with stronger rhetoric, and a separate Reuters report from Tokyo said top currency diplomat Atsushi Mimura signaled that authorities could take tougher action if speculative moves persist, while BOJ Gov. Kazuo Ueda kept the door open to a near-term rate hike.
Why the US dollar is benefiting from the Hormuz shock
The flow pattern explains the divergence. Haven demand is lifting the dollar at the same time that higher crude prices are punishing large energy importers more than the United States. The International Energy Agency’s Strait of Hormuz profile says nearly 20 million barrels a day of oil moved through the waterway in 2025, with about 80% of those flows heading to Asia. That leaves Japan particularly exposed when shipping risk in the Gulf surges and crude jumps.
The oil market is the clearest transmission channel into foreign exchange. Reuters reporting on Brent’s record monthly leap said Brent traded around $114.55 a barrel Monday after Houthi attacks widened the conflict, while Reuters coverage of Barclays’ Hormuz supply scenario said a prolonged disruption could remove 13 million to 14 million barrels a day from global supply. In that setup, the yen weakens not only because the dollar is firm, but because Japan’s import bill rises in real time.
US dollar strength is reopening old pressure points for Japan
For Japanese policymakers, the issue is no longer just the exchange rate itself. A weaker yen raises the local cost of fuel, freight and industrial inputs, increasing the risk that an external oil shock spreads into broader prices. That helps explain why intervention threats have hardened even as the BOJ weighs whether another rate increase may be needed.
Older context that still matters
The latest move also echoes earlier market flashpoints. In April 2024, Reuters reported a suspected intervention after dollar-yen lurched off 160, underlining how sensitive Tokyo had already become to that level. On the energy side, a 2019 Reuters factbox on Gulf attacks and tanker incidents showed how even limited disruptions around Hormuz could quickly spread through shipping, crude and broader risk sentiment.
Unless the Gulf crisis cools quickly and oil gives back a meaningful part of March’s surge, the market bias still favors a firmer US dollar and a more fragile yen.
