The Japanese yen rose broadly in the Asian market on Wednesday against a basket of major and minor currencies, extending its gains for the second consecutive day against the US dollar and recording its highest level in a week, driven by improved sentiment in global markets after the United States and Iran agreed on a two-week ceasefire, which includes the opening of the Strait of Hormuz to global navigation.

With the sharp drop in global oil prices, indicators of receding inflationary pressures on monetary policymakers at the Bank of Japan are increasing, which reduces the likelihood of raising Japanese interest rates later this month.

Price Overview

- Japanese yen exchange rate today: the dollar fell against the yen by 0.8% to (158.29) as the lowest level in a week, from the opening price today at (159.59), and recorded a high of (159.75).

- The yen ended Tuesday's trading up by less than 0.1% against the dollar, marking its second gain in three days, based on hopes of ending the Iranian war.

US Dollar

The dollar index fell on Wednesday by 0.7%, deepening its losses for the third consecutive session and recording a four-week low at 98.84 points, reflecting a broad decline in the levels of the American currency against a basket of global currencies.

Risk sentiment in the markets improved, and investor appetite for buying global assets and currencies increased following the ceasefire agreement between the United States and Iran.

Iran War Updates

- Washington and Tehran agree on a two-week ceasefire and plan to open the Strait of Hormuz.

- US President Donald Trump agreed to suspend attacks and aerial bombardment against Iran for 14 days, following intensive Pakistani and Qatari mediation.

- Iran announced its agreement to reopen the Strait of Hormuz to international navigation "fully and safely," with technical coordination with the Iranian armed forces to secure the passage of ships.

- Direct negotiations to end the war are scheduled to begin next Friday in the city of Islamabad in Pakistan, as the truce aims to provide an opportunity for a diplomatic solution.

Global Oil Prices

Global oil prices fell by an average of 13%, recording their lowest levels in several weeks, as concerns over global supply shortages receded, especially after the reopening of the Strait of Hormuz to giant oil tankers.

Japanese Interest Rates

- Following the fall in global oil prices, the pricing of the probabilities of the Bank of Japan raising interest rates by a quarter of a percentage point in the April meeting fell from 10% to 5%.

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