Yen

The silence during Wednesday’s Asian trading session was tense. Not the kind of silence where nothing happens, but the kind where everyone holds their breath and stares at a single number on their screens: 160. Three digits that, for the Japanese yen, matter more than any economic forecast or government report.

The dollar-yen exchange rate hovered around 159.9. It was like standing at the edge of a cliff and looking down. One step forward, and you're at 160 — precisely the level Japanese authorities deemed unacceptable back in April.

Four months ago, Japan’s Ministry of Finance woke up to a yen trading at 160 and launched a currency intervention on a scale the country had not seen in decades. Officials spent a record ¥11.5 trillion — nearly $73 billion — defending the currency. It was the largest single-round intervention in modern Japanese history.

But markets are notoriously stubborn. The impact proved short-lived. As soon as Japanese officials breathed a sigh of relief and congratulated themselves, the dollar resumed its slow, relentless advance. And today, the 160 level was briefly touched again. Only for a few minutes — but those few minutes were enough to make thousands of traders around the world forget about their coffee and everything else.

There are several explanations, rooted not in emotion but in the hard realities of global finance.

The most obvious factor is U.S. monetary policy. The Federal Reserve has made it clear that it is in no rush to cut interest rates. Contrary to gloomy predictions, the U.S. economy continues to show remarkable resilience.

Labor market data surprised analysts with stronger-than-expected job openings, while consumer spending has softened only modestly...

Monday ended with explosions. By Tuesday, markets woke up in a different world — one where hopes for imminent peace, which had lifted Asian stocks and currencies just a day earlier, were shattered by the harsh reality of military force. The United States carried out strikes on targets in southern Iran. Although details remain scarce and official statements cautious, that alone was enough for the markets. The dollar resumed its climb. Oil surged alongside it. Asian currencies, which had celebrated gains on Monday morning, came under pressure by Tuesday. The geopolitical pendulum swung back — and this time, those who had rushed to believe in peace were the ones falling.

Reports of new U.S. strikes on Iranian facilities emerged on Monday. The targets were located in the south of the country — a region strategically important both for Iran’s military infrastructure and for control over the Persian Gulf coastline. Details of the operation remain classified, but the mere resumption of military action after several days of intense negotiations suggests either that diplomacy has hit a dead end or that talks are being used as cover for continued military pressure.

Iranian officials reacted immediately. Their warning was blunt and unequivocal: any attacks on the country’s military facilities would trigger retaliation. This was not rhetoric — it was a promise of escalation. Markets interpreted it exactly that way: as a signal that the conflict is far from over and that the risks of a new spiral of violence are growing by the hour.

The contrast with the mood over the weekend could not be sharper. As recently as Saturday and Sunday, Trump had spoken about a memorandum that was “mostly agreed upon,” about reopening shipping routes through the Strait of Hormuz,...