Lagarde Downplays War Impact as Japan Grows Wary of Yen Depreciation Risks

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Summary:

The Japanese yen has approached its weakest level in 39 years, while ECB President Christine Lagarde said the European Central Bank does not currently need to adopt a more aggressive response to the Iran conflict.

Highlights

1. The United States temporarily lifts sanctions on Iranian oil.

2. Israel says it will continue operations to destroy military infrastructure in southern Lebanon.

3. Trump says Iran will agree to weapons inspections.

4. Andy Burnham, a leading contender for the UK Labour leadership, is formally sworn in as a Member of Parliament.

5. The yen approaches its weakest level in 39 years as Japan's finance minister holds urgent talks with Bessent.

6. Lagarde says the ECB does not need stronger measures in response to the Iran conflict for now.

Details

U.S. Temporarily Lifts Sanctions on Iranian Oil

U.S. Treasury Secretary Scott Bessent announced via social media on June 22 that, as part of the framework for negotiations between the United States and Iran, the Treasury Department has issued a 60-day general license authorizing the production, delivery and sale of Iranian oil.

According to a notice released by the Office of Foreign Assets Control (OFAC), transactions involving the production, delivery and sale of Iranian crude oil, petrochemicals and petroleum products that had previously been prohibited under various U.S. executive orders and regulations have been exempted until August 21, 2026. The notice also permits the import of Iranian crude oil, petrochemicals and petroleum products into the United States.

Israel Says It Will Continue Operations Against Military Infrastructure in Southern Lebanon

Late on June 22, the Israeli Prime Minister's Office released a statement on social media saying that Prime Minister Benjamin Netanyahu, Defense Minister Israel Katz, IDF Chief of Staff Eyal Zamir and Northern Command chief Rafi Milo had held a telephone conference.

In a joint statement issued afterward, Netanyahu, Katz and Zamir said that the Israel Defense Forces would continue taking decisive action to counter threats against Israeli soldiers and civilians, destroy military infrastructure in southern Lebanon, and maintain what Israel describes as a security zone in the area.

Trump Says Iran Will Agree to Weapons Inspections

U.S. President Donald Trump said in a social media post on June 22 that all parties fully understand that Iran will agree to extensive weapons inspections to ensure its long-term nuclear compliance.

Earlier that day, the first round of talks between U.S. and Iranian delegations concluded in Switzerland's Birg Mountain region. Speaking at a press conference, U.S. Vice President J.D. Vance said substantial progress had been made and that the negotiations had laid a solid foundation for a final agreement. He added that Iran had agreed to invite inspectors from the International Atomic Energy Agency (IAEA) back into the country.

Iran's state news agency IRNA later quoted Foreign Ministry spokesman Esmaeil Baghaei as saying that Iran's cooperation and interaction with the IAEA would continue under existing mechanisms and in accordance with Iranian parliamentary legislation and decisions made by the Supreme National Security Council.

Andy Burnham Officially Sworn In as MP

On June 22, former Greater Manchester Mayor Andy Burnham was formally sworn in as the Member of Parliament for the Makerfield constituency, completing the final step in his return to the House of Commons. Burnham won last week's by-election and secured his parliamentary seat.

Under British parliamentary convention, newly elected MPs must swear allegiance to the King before officially taking office and gaining voting and speaking rights in the House of Commons. Burnham completed the oath-taking ceremony accompanied by Labour MPs Anneliese Midgley and Jo Platt.

Earlier in the day, Prime Minister Keir Starmer announced outside 10 Downing Street that he would step down as leader of the Labour Party, although he would remain prime minister until a successor is chosen.

Burnham subsequently announced his candidacy for the Labour leadership. With several prominent Labour figures publicly endorsing him, British media widely view Burnham as the frontrunner to succeed Starmer and potentially become the UK's next prime minister.

Yen Nears Weakest Level in 39 Years as Japanese Officials Hold Emergency Talks

According to Kyodo News and other Japanese media outlets, Japan's Finance Minister Katsuyuki Katayama held an online meeting with U.S. Treasury officials on Monday, June 22, as the yen approached its weakest level in 39 years.

Sources said Katayama may have exchanged views with U.S. Treasury Secretary Scott Bessent on foreign exchange market developments and the possibility of currency intervention.

Earlier in the session, the yen weakened to as low as 161.93 per dollar, down 0.38%. Following reports of the talks, the Japanese currency quickly rebounded and briefly strengthened to around 161.09 per dollar, prompting speculation that Japanese authorities may have intervened in the market.

Lagarde: ECB Does Not Need Stronger Policy Response to Iran Conflict for Now

European Central Bank President Christine Lagarde said that despite the impact of tensions in the Middle East, the ECB does not currently need to adopt stronger policy measures because inflation is still expected to return to target over the medium term.

Speaking before members of the European Parliament in Brussels, Lagarde said households do not believe the current elevated inflation rate will persist, reinforcing the ECB's confidence that inflation can decline from above 3% back to the 2% target with appropriate monetary policy measures.

Lagarde added that the ECB has not observed any signs of de-anchored inflation expectations or second-round effects severe enough to warrant a more aggressive policy response at this stage.

Today's Focus

15:15 (UTC+8) France June Manufacturing PMI (Preliminary)

15:30 (UTC+8) Germany June Manufacturing PMI (Preliminary)

16:00 (UTC+8) Eurozone June Manufacturing PMI (Preliminary)

16:30 (UTC+8) UK June Manufacturing PMI (Preliminary)

16:30 (UTC+8) ECB Chief Economist Philip Lane Delivers Remarks

21:00 (UTC+8) Bank of Canada Governor Tiff Macklem Delivers Remarks

21:45 (UTC+8) U.S. S&P Global Manufacturing PMI (Preliminary, June)

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