The Japanese yen declined in the Asian market on Friday against a basket of major and minor currencies, continuing its losses for the fifth consecutive day against the U.S. dollar. Trading near a two-week low, the yen is on track for its first weekly loss in a month under the watchful eye of Japanese authorities, as the Finance Minister renewed warnings against speculation in the foreign exchange market.

Investors remain focused on purchasing the U.S. dollar as the preferred alternative investment amid escalating tensions between the United States and Iran in the Strait of Hormuz, where both sides have exchanged control over vessels and oil tankers.

Data released today in Tokyo showed a rise in Japans core inflation for March; however, this increase was not sufficient to boost the probability of the Bank of Japan (BoE) raising interest rates next week.

Price Overview

- Japanese Yen Exchange Rate Today: The dollar rose against the yen by approximately 0.15% to (159.84), from todays opening price of (159.64), after recording a low of (159.60).

- The yen ended Thursday's trading down 0.15% against the dollar, marking its fourth consecutive daily loss due to escalating U.S.-Iran tensions.

Weekly Trading

Throughout this week's trading, which officially concludes with price settlements today, the Japanese yen has fallen by approximately 0.8% against the U.S. dollar so far, positioned to incur its first weekly loss in a month.

Japanese Authorities

Japanese Finance Minister Satsuki Katayama reaffirmed her verbal warning on Friday regarding exchange market intervention, noting that authorities are capable of taking "decisive" action to counter speculation. This followed her statement yesterday that Japan enjoys "full freedom" to intervene, asserting that previous interventions were effective.

As authorities continue to combat yen weakness, Akihiko Yoko, chief analyst at MUFG Bank, stated that it is difficult to imagine a scenario where the yen drops sharply below the 160 level against the dollar in the near term.

The U.S. Dollar

The dollar index rose by more than 0.1% on Friday, extending gains for the fourth consecutive session and reflecting the continued ascent of the American currency.

This rise comes as investors prioritize the U.S. dollar as a safe haven, given that the U.S. and Iran remain deadlocked over the ceasefire, the blockade, nuclear issues, and control of the Strait. These disputes keep the strategic waterway effectively closed, threatening an energy sector shock that could damage global economies.

Skye Masters, head of markets research at National Australia Bank, noted: "Despite Trump's extension of the ceasefire, tensions remain high with Iran's refusal to reopen the Strait of Hormuz and the continued U.S. naval blockade, increasing the risk of prolonged supply disruptions."

Iranian War Updates

- Trump: Tehran wants to make a deal, but its leadership is in turmoil.

- Trump: We are in no rush for a deal, but if Iran does not want one, "I will end it militarily."

- Iranian President Masoud Pezeshkian described the U.S. blockade and threats as "main obstacles" to genuine negotiations.

- Pakistan continues its efforts to revive peace talks between the U.S. and Iran in Islamabad.

- Iran seized a new vessel in the Strait of Hormuz, challenging U.S. naval superiority.

Global Oil Prices

Global oil prices rose by more than 0.5% on Friday, maintaining gains for the fifth consecutive day. Prices are trading near two-week highs due to mounting fears of energy supply disruptions as the Strait of Hormuz remains closed to tankers. The rise in oil prices renews concerns over accelerating inflation, which may push central banks to raise interest rates in the near term.

Core Inflation

Data released today in Tokyo showed Japan's Core Consumer Price Index (CPI) rose by 1.8% in March, higher than market expectations of 1.7% and up from 1.6% in February. These figures indicate growing inflationary pressures on BoJ policymakers, potentially increasing the chances of Japanese rate hikes later this year.

Japanese Interest Rates

- Reuters reported that the BoJ is likely to refrain from raising interest rates next week, as the fading prospects of a near-term end to the Middle East war keep economic and price outlooks highly uncertain.

- Governor Kazuo Ueda has recently refrained from pledging an April rate hike due to the war's impact on economic projections.

- Market pricing for a 25-basis-point hike in April remains stable at around 10%.

Expectations for Japanese Yen Performance

Suzuki from Matsui Securities stated that intervention by Japanese authorities is unlikely unless the dollar/yen exchange rate exceeds its April 2024 high of 161.95. He added that even if yen weakness accelerates after next week's BoJ meeting, the central bank will likely start with verbal statements before resorting to actual intervention.