Asian markets traded unevenly Tuesday as the yen climbed to its strongest level since February while renewed Iranian threats against U.S. energy infrastructure pushed Brent crude above $97 a barrel. The combination of a stronger yen, higher oil prices and rising geopolitical risk kept regional investors cautious ahead of U.S. inflation data.
The yen rose as much as 0.6% to 153.51 per dollar, its strongest level since Feb. 18, while Japan’s Nikkei 225 edged up 0.2%. The MSCI Asia-Pacific index excluding Japan gained 0.2%, led by a 1.2% rise in South Korea’s Kospi, according to Reuters market data.
Yen Rally Puts Japanese Exporters Under Pressure
The yen’s advance accelerated as traders unwound short positions and increased bets that the Bank of Japan could tighten monetary policy. The currency has gained about 4.5% since the previous week, reaching 152.89 at one point before settling near 153.32 per dollar, according to Reuters.
Japan’s stronger economic data has reinforced those expectations. Revised second-quarter GDP data showed faster growth than the initial estimate, while real wages increased 2.4% year over year, strengthening the case for additional BOJ policy tightening, Reuters reported.
For exporters, however, the currency move creates an earnings headwind because a stronger yen reduces the domestic-currency value of overseas revenue. The Nikkei still gained 0.2% Tuesday, but its intraday swings reflected the competing effects of stronger domestic growth and currency appreciation.
Iran Energy Threat Keeps Oil Above $97
Iranian threats to retaliate against U.S. energy infrastructure added a fresh supply-risk premium to crude. Brent futures rose 0.04% to $97.04 a barrel Tuesday after reaching a six-week high, while U.S. West Texas Intermediate crude traded above $92.
The threat is particularly significant because oil flows through the Strait of Hormuz remain severely constrained. The U.S. Energy Information Administration estimated that crude and petroleum liquids moving through the waterway averaged only 4.9 million barrels per day in the second quarter of 2026, down from 21.6 million barrels per day in the fourth quarter of 2025 before the conflict.
Asian economies remain exposed to the disruption because of their dependence on imported crude. The EIA said China, the world’s largest crude importer, brought in 8.1 million barrels per day in the second quarter, 32% less than in the previous quarter as higher prices and disrupted Hormuz flows reduced imports.
Asia Markets Await U.S. Inflation Signal
The broader regional market response remained mixed rather than uniformly risk-off. The Kospi gained 1.2%, the MSCI Asia-Pacific index excluding Japan rose 0.2% and Nikkei advanced 0.2%, while U.S. S&P 500 futures declined 0.1% after Wall Street was closed for the Labor Day holiday.
Currency markets are now focused on U.S. inflation data due Friday, which could influence expectations for the Federal Reserve’s September policy decision. Reuters reported that traders were pricing roughly a 60% probability of a U.S. rate hike, while the dollar index remained near 98.83.
The immediate market picture therefore remains supported by strong Japanese currency momentum and resilient Asian equities despite elevated energy risk. With the yen at a seven-month high and crude near $100, upcoming U.S. inflation data and developments around Gulf energy infrastructure will provide the next major tests for regional markets.
