The Japanese yen declined in Asian trading on Thursday against a basket of major and minor currencies, deepening its losses for a second consecutive session against the US dollar and touching a one-week low. The move came as investors continued to favor the US currency after the Federal Reserve meeting minutes showed that policymakers are in no rush to move toward interest rate cuts.

US President Donald Trump announced projects worth $36 billion as the first round of investments under Japan’s pledge to invest $550 billion in the United States within the framework of the latest trade agreement between the two countries.

Price Overview

• Japanese yen exchange rate today: The dollar rose against the yen by 0.35% to ¥155.29, the highest level since February 10, from an opening level of ¥154.76. The pair recorded a session low at ¥154.62.

• The yen ended Wednesday’s session down 1.0% against the dollar, marking its second loss in three days, pressured by the Federal Reserve minutes.

US Dollar

The dollar index rose 0.1% on Thursday, extending gains for a fourth straight session and hitting a two-week high at 97.78 points, reflecting continued strength of the US currency against a basket of global currencies.

Minutes from the latest Federal Reserve meeting, held on January 27–28, showed divisions among policymakers regarding the appropriate path for US interest rates. The minutes also indicated that the incoming Fed chair, expected to take office in May, could face challenges in pushing through any rate cuts.

The minutes further revealed that some members expect productivity gains to help ease inflationary pressures, while “most participants” warned that the path toward lower inflation may be slow and uneven. Some even hinted at the possibility of raising interest rates again if inflation remains above target.

Following the minutes, and according to the CME FedWatch tool, pricing for keeping US interest rates unchanged at the March meeting rose from 90% to 95%, while expectations for a 25-basis-point rate cut fell from 10% to 5%.

Investment Spending

The administration of President Donald Trump announced the launch of $36 billion worth of projects, representing the first tranche of Japan’s pledged $550 billion investment package in the United States.

The move aims to strengthen economic cooperation between the two countries and support Japanese investment in strategic sectors within the US market.

Views and Analysis

• Chris Turner, Head of Global Research at ING, said that Japanese direct investment into the United States will be a key factor to watch this year, adding complexity to the already mixed outlook for the dollar/yen pair.

• Turner added that the key question for currency markets is whether these investments will generate dollar-supportive flows or whether Japan will rely on its foreign exchange reserves to back new dollar loans and avoid pressure on the yen, noting that the latter appears to be Tokyo’s preferred outcome.

Japanese Interest Rates

• Market pricing for a quarter-point rate hike by the Bank of Japan at its March meeting remains below 10%.

• Pricing for a quarter-point hike at the April meeting is currently around 50%.

• According to the latest Reuters poll, the Bank of Japan may raise rates to 1% by September.

• Investors are awaiting further data on inflation, employment, and wages in Japan to reassess these expectations.

Oil prices climbed more than 4% during Wednesday’s trading session, amid mounting concerns over the potential outbreak of a conflict between the United States and Iran.

Two days of peace talks in Geneva between Russia and Ukraine ended with little progress, as Ukrainian President Volodymyr Zelensky accused Moscow of obstructing US-led efforts to end the war.

The US government announced that Iran had failed to meet its key demands outlined during the nuclear negotiations.

US Vice President J.D. Vance stated that President Donald Trump retains the right to use force if diplomacy fails to halt Iran’s nuclear program.

In trading, April Brent crude futures rose 4.35%, or $2.93, to settle at $70.35 per barrel.

Meanwhile, March US Nymex crude futures gained 4.59%, or $2.86, to close at $65.19 per barrel.

The minutes of the US Federal Reserve’s January meeting revealed divisions among officials regarding the future path of interest rates, as they indicated that further cuts could be paused for now, with the possibility of resuming later this year if the inflation trajectory allows.

Although the decision to keep the benchmark interest rate unchanged received relatively broad support, the road ahead appeared less clear, with members split between prioritizing the fight against inflation and supporting the labor market, according to the minutes released Wednesday for the January 27–28 meeting.

The meeting summary stated: “In considering the outlook for monetary policy, a number of participants remarked that further reductions in the target range for the federal funds rate would likely be appropriate if inflation continued to move lower in line with their expectations.”

However, participants differed over the appropriate policy direction, debating whether greater emphasis should be placed on curbing inflation or on supporting the labor market.

The minutes added: “Some participants indicated that it would likely be appropriate to maintain the policy rate at its current level for some time while the Committee carefully assesses incoming data, and several judged that additional monetary easing might not be warranted until there is clearer evidence that the disinflation process has resumed on a firm footing.”

Some officials also discussed the possibility of raising rates again and called for the post-meeting statement to reflect a “two-sided description of future policy decisions.”

Such language would reflect “the possibility that upward adjustments to the target range for the federal funds rate could be appropriate if inflation were to remain above target.”

The Federal Reserve had previously lowered its benchmark borrowing rate by three-quarters of a percentage point through three consecutive cuts in September, October, and December, bringing the main rate into a range between 3.5% and 3.75%.

This meeting marked the first under a new voting configuration of regional bank presidents, including Dallas Fed President Lorie Logan and Cleveland Fed President Beth Hammack, both of whom have publicly stated that the Fed should keep policy unchanged for an extended period, arguing that inflation remains an ongoing threat and should remain the central focus. All governors and the 19 regional bank presidents participate in meetings, but only 12 hold voting rights.

With ideological divisions already present within the Committee, the split could deepen if former governor Kevin Warsh is confirmed as the next Fed Chair. Warsh has expressed support for rate cuts, a stance also shared by current governors Steven Miran and Christopher Waller. Both Waller and Miran dissented at the January meeting, favoring an additional quarter-point cut. Current Chair Jerome Powell’s term is set to expire in May.

The minutes do not identify participants by name, instead using descriptions such as “some,” “a few,” and “many,” and included two rare references to an “overwhelming majority” to characterize certain views.

Overall, participants expected inflation to decline over the course of the year, “although the pace and timing of that decline remained uncertain.” They also discussed the impact of tariffs on prices, anticipating that such effects would gradually fade as the year progresses.

The minutes stated: “Most participants cautioned that progress toward the Committee’s 2% objective could be slower and more uneven than generally expected, and viewed the risk of inflation remaining above target for longer as significant.”

During the meeting, the Federal Open Market Committee adjusted some language in its statement, noting that risks related to inflation and the labor market had become more balanced, softening earlier concerns about employment conditions.

Since the meeting, labor market data have been mixed, with indications of further slowing in private-sector job creation, and limited growth largely concentrated in the healthcare sector. Nevertheless, the unemployment rate declined to 4.3% in January, while nonfarm payroll growth came in stronger than expected.

On the inflation front, the personal consumption expenditures index — the Fed’s preferred gauge — has remained stuck near 3%. However, a report released last week showed that the consumer price index, excluding food and energy, fell to its lowest level in nearly five years.

Futures traders currently see June as the most likely timing for the next rate cut, with the possibility of another reduction in September or October, according to CME Group’s FedWatch tool.

The first oil licensing round in Libya since the overthrow of the late leader Muammar Gaddafi in 2011 marked a notable return — or expansion — of major Western oil companies, in what was seen as a significant success for Tripoli. As part of the National Oil Corporation’s plan to raise production to two million barrels per day by 2028, Libya announced last year the offering of 22 onshore and offshore blocks in its first bid round.

Among the most prominent winners was US-based Chevron, which was awarded Area 106 in the oil-rich Sirte Basin, marking its return to the country after a 16-year absence. Other major Western companies secured new concessions as well, including Italy’s ENI, Spain’s Repsol, Hungary’s MOL Group, in addition to QatarEnergy. The key question, however, remains: does this signal the beginning of a new chapter for Libya, or is it merely a fleeting moment of optimism?

What fuels optimism is not only the breadth of Western companies expanding their footprint in Libya, but also the nature of these firms. The oil and gas sector occupies a unique position in global business, as companies operating abroad are often granted substantial operational autonomy — in legal terms, somewhat comparable to embassies, which are treated as sovereign territory wherever they are located.

Under international law, foreign oil and gas companies are permitted to deploy appropriate security personnel and infrastructure to protect their investments, subject to host government approval — which is typically granted. As a result, the gradual expansion of major oil companies’ presence can be one of the most effective tools for building political influence in a foreign state.

The British East India Company is frequently cited as an early and prominent example of this model. Founded in 1600, it expanded British influence across large parts of Asia over nearly 300 years, including India and Hong Kong, supported at one point by a British security force of roughly 260,000 men. Its expansion was self-financed through commercial profits — a model that some Western powers have sought to replicate in modern forms elsewhere.

In recent years, major Western oil and gas companies have led US and European efforts to rebuild influence in the Middle East, particularly after the United States unilaterally withdrew in 2018 from the Iran nuclear agreement (the Joint Comprehensive Plan of Action). That withdrawal created space for China and Russia to expand their footprint through Iran and across what is often referred to as the “Shia Crescent,” encompassing Iraq, Syria, and Lebanon, and extending toward former Western allies such as Saudi Arabia and the UAE.

During the second term of President Donald Trump, pressure on Iran intensified, indirectly targeting both China and Russia as well. Another factor has been Europe’s loss of Russian oil and gas supplies following Russia’s 2022 invasion of Ukraine, which strengthened the need for new exploration and development opportunities in the Middle East.

Leading this effort are companies such as Chevron, ConocoPhillips, and ExxonMobil from the United States; BP and Shell from the United Kingdom; TotalEnergies from France; ENI from Italy; and Repsol from Spain. QatarEnergy’s participation in a consortium with ENI in Libya highlights the country’s potential role as a key supplier of liquefied natural gas to Europe in the post-Ukraine war era, particularly given its designation as a major non-NATO ally.

Despite ongoing civil conflict since 2011, Libya retains substantial oil and gas potential. Before Gaddafi’s fall, production stood at around 1.65 million barrels per day of high-quality light crude sought after in Mediterranean and northwest European markets. The country also holds Africa’s largest proven oil reserves, estimated at roughly 48 billion barrels.

Prior to Gaddafi’s removal, production had been rising compared to approximately 1.4 million barrels per day in 2000, though still below the late-1960s peak above 3 million barrels per day. At the time, the National Oil Corporation planned to implement enhanced oil recovery techniques to boost output from mature fields, with expectations of adding about 775,000 barrels per day in capacity.

During the height of the civil war, production collapsed to around 20,000 barrels per day. Although output has since recovered to roughly 1.3 million barrels per day — its highest level since mid-2013 — politically motivated shutdowns have at times pushed production down to just above 500,000 barrels per day.

Libya also plans to expand natural gas production to become a significant supplier to Europe by the early 2030s, targeting output of approximately one billion standard cubic feet per day and beginning shale gas drilling in the second half of this year.

Some observers argue that the growing presence of major Western companies in Libya could, over time, help encourage a broader peace process, particularly as it draws greater political attention from Washington, London, Paris, and Brussels. However, the fundamental cause of repeated oil shutdowns since 2020 remains unresolved.

Field Marshal Khalifa Haftar, commander of the Libyan National Army, linked the September 18, 2020 ceasefire agreement with the UN-recognized Government of National Accord to a long-term resolution of oil revenue distribution. He proposed forming a joint technical committee to oversee oil revenues, ensure fair resource allocation, monitor implementation of the agreement, and prepare a unified budget addressing the needs of all parties, with the Central Bank of Libya required to execute approved payments without delay.

None of these arrangements, however, has been implemented, and no serious negotiations are currently underway to resolve them. While expanded Western economic interests may eventually support such reforms, Libya’s long-term stability will remain uncertain unless the underlying political and financial disputes are fundamentally addressed.