The Japanese yen declined in Asian trading on Thursday against a basket of major and minor currencies, extending losses for the third consecutive day against the US dollar and hitting a two-month low as investors continued buying the US currency as a preferred safe-haven asset amid escalating military confrontations in the Middle East.

Global oil prices surged again above $100 per barrel after Irans Revolutionary Guard launched attacks on several oil tankers in the Strait of Hormuz, while Tehran warned the world to prepare for oil prices reaching $200 per barrel.

Despite growing speculation about accelerating inflationary pressures on policymakers at the Bank of Japan, the probability of a Japanese interest rate hike before September remains weak, as investors await further data on developments in the worlds fourth-largest economy.

Price Overview

Japanese yen exchange rate today: the US dollar rose against the yen by 0.2% to 159.24, the highest level since January 14, up from the session opening at 158.94, after touching a low of 158.78.

The yen ended Wednesdays session down about 0.6% against the dollar, marking the second consecutive daily loss amid intensifying military clashes in the Middle East.

US Dollar

The dollar index rose about 0.3% on Thursday, extending gains for a third consecutive session and approaching its highest level in four months, reflecting continued strength in the US currency against a basket of global currencies.

US President Donald Trump said on Wednesday that Washington is in a very good position in its war with Iran and that the United States would pay very close attention to the Strait of Hormuz.

US Central Command also said in a statement that the US military had destroyed 16 Iranian minelaying vessels near the Strait of Hormuz.

Three sources familiar with the matter told Reuters that US intelligence assessments indicate Irans leadership remains largely intact and is not at risk of collapse anytime soon after nearly two weeks of sustained US and Israeli bombing.

Global oil prices

Brent crude surged more than 8% on Thursday, extending gains for the third consecutive day and trading again above $100 per barrel after Iran launched new attacks on oil tankers and energy storage facilities.

Irans military leadership announced Wednesday that the world should prepare for oil prices reaching $200 per barrel after three more vessels were attacked in the besieged Gulf.

Analysts said the International Energy Agencys proposal to release 400 million barrels from strategic reserves a record amount is insufficient to calm concerns about supply disruptions from the Middle East.

Japanese interest rates

Markets are pricing a 5% probability that the Bank of Japan will raise interest rates by a quarter point at the March meeting, while the probability of a similar hike at the April meeting stands at 35%.

In the latest Reuters poll, economists expect the Bank of Japan to raise interest rates to 1% by September.

Analysts at Morgan Stanley and Mitsubishi UFJ Financial Group wrote in a joint research report that they had previously viewed the chances of a rate hike in March or April as low, but the rising uncertainty stemming from developments in the Middle East is likely to push the Bank of Japan toward a more cautious stance, further reducing the likelihood of near-term rate hikes.

To reassess these expectations, investors are awaiting additional data on inflation, unemployment, and wages in Japan.