The Japanese yen fell in Asian trading on Thursday against a basket of major and minor currencies, giving up its three-week high against the US dollar due to correction and profit-taking operations, as the American currency recovered from low levels amid growing investor concerns regarding the fragility of the ceasefire agreement between the United States and Iran.

In light of the current division over the probabilities of the Bank of Japan raising interest rates when it meets later this year, the latest forecasts indicate that in the event of the collapse of the ceasefire in the Middle East, Japanese interest rates will remain unchanged for the third consecutive meeting.

Price overview

* Japanese yen exchange rate today: the dollar rose against the yen by 0.25% to (158.95), from the opening price of the day at (158.54), and recorded the lowest level at (158.45).

* The yen ended Wednesdays trading up by 0.65% against the dollar, in the second consecutive daily gain, and recorded a three-week high at 157.89 yen, after the United States and Iran agreed on a two-week ceasefire, which includes opening the Strait of Hormuz to global navigation.

US dollar

The dollar index rose on Thursday by about 0.2%, to begin recovering from a four-week low at 98.53 points, reflecting a recovery in the levels of the American currency against a basket of global currencies.

Investors cautiously and anxiously assessed the resilience of the fragile ceasefire, which began yesterday, Wednesday, and lasts for two weeks between the United States and Iran, in light of escalating regional tensions, especially after Israel launched violent military attacks on Lebanon, which angered Iranian authorities and increased uncertainty in the markets.

Sho Suzuki, market analyst at Matsui Securities, said: Some doubts may have begun to appear about the sustainability of the ceasefire expectations, or even the possibility of concluding a final ceasefire at all.

Iran war updates

* U.S. Vice President JD Vance describes the ceasefire with Iran as a "fragile truce" and says that Trump is "eager to make progress."

* The Speaker of the Iranian Parliament states that the United States violated the ceasefire agreement.

* The ceasefire agreement fails to stop the fighting between Israel and Hezbollah, and Israeli strikes result in the death of 254 people in Lebanon.

* Iran says that peace talks will be "illogical" in the wake of the Israeli strikes on Lebanon.

* Washington confirms that the situation in Lebanon is outside the framework of the ceasefire agreement, while Tehran insists that it is one of the fundamental clauses.

* The United States and Iran prepare for talks in Pakistan amid disputes between the two countries over the terms of the nuclear program.

Japanese interest rates

* The pricing of the probabilities of the Japanese central bank raising interest rates by a quarter of a percentage point in the April meeting is stable around 10%.

* In order to re-price those probabilities, investors await the release of more data about the levels of inflation, unemployment, and wages in Japan.

Expectations about the performance of the Japanese yen

Sho Suzuki, market analyst at Matsui Securities, said: With the continued situation in the Middle East, there seems to be a trend toward expansionary fiscal policy again. This in turn contributes to the weakness of the yen.

Suzuki added: In the event of the collapse of the ceasefire, expectations for a interest rate hike in April may begin to fade, which may in turn lead to the weakness of the yen.

Suzuki explained: Raising the interest rate depends heavily on the situation in Iran, so it is likely that the Bank of Japan will wait until the last moment before the meeting to assess the developments of the situation.