BREAKING: The Japanese yen has fallen to its weakest level against the US dollar in nearly 21 months.

Japan has stepped in before when the yen dropped rapidly. However, intervention usually only slows the decline — it doesn’t solve the underlying issue.

The bigger problem is imported inflation driven by energy costs.

Japan relies heavily on foreign energy, importing about 87% of its fossil fuels. Around 70% of its Middle Eastern oil shipments pass through the Strait of Hormuz, making the country highly vulnerable to disruptions.$BTC

With the strait reportedly closed and oil prices climbing above $100, Japan’s energy import costs are rising sharply. This is putting additional downward pressure on the yen.

As the yen weakens, the cost of imports increases — including energy, food, and raw materials. During an energy crisis, a weaker currency worsens inflation and economic strain.

If the Strait of Hormuz remains closed and energy prices stay elevated, the yen could face further downside pressure.