The Japanese yen rose in Asian trading on Friday against a basket of major and minor currencies, in an attempt to recover from a one-week low against the US dollar, benefiting from a slowdown in the US currency after Donald Trump announced a new delay in targeting Iranian energy facilities, which renewed hopes of reaching a ceasefire agreement in the Middle East.

As inflationary pressures on policymakers at the Bank of Japan ease, expectations for a Japanese interest rate hike in April have declined. To reassess those expectations, investors are awaiting further data on developments in the world’s fourth-largest economy.

Price Overview

Japanese yen exchange rate today: the US dollar fell 0.2% against the yen to ¥159.46, down from the session opening level of ¥159.78, after reaching a high of ¥159.79.

The yen ended Thursday’s session down 0.2% against the dollar, marking its third consecutive daily loss, and hitting a one-week low of ¥159.85, due to fading hopes for a ceasefire in the Middle East.

US dollar

The dollar index fell 0.1% on Friday, heading toward its first loss in the past four sessions, reflecting a slowdown in the US currency against a basket of global currencies.

This comes as traders assess the likelihood of a halt in the war in the Middle East, amid intensified diplomatic efforts aimed at containing the escalation, with cautious anticipation of any signals that could pave the way for a de-escalation agreement or ceasefire.

Iran war developments

US President Donald Trump announced an extension of the delay in strikes on Iranian energy facilities for an additional 10 days, through April 6, noting that negotiations to end the war are progressing “very well.”

US Special Envoy Steve Witkoff confirmed that a 15-point peace proposal had been presented to Tehran via Pakistan, which is acting as a mediator alongside Egypt and Turkey.

The proposal includes a ceasefire and sanctions relief in exchange for Iran abandoning its nuclear program and reopening the Strait of Hormuz.

Iranian sources described the US proposal as “unfair and one-sided,” while state media expressed doubts about Washington’s seriousness, stressing that attacks will not stop without real guarantees.

The Wall Street Journal reported on Thursday that the Pentagon is also considering sending up to 10,000 additional ground troops to the Middle East.

Japanese interest rates

Data released this week showed a slowdown in core inflation in Japan during February, in the latest sign of easing inflationary pressures on policymakers at the Bank of Japan.

Following the data, markets reduced pricing for the probability of a quarter-point rate hike by the Bank of Japan at the April meeting from 30% to 15%.

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

Oil prices rose during Thursday’s trading, recovering losses from the previous session, as investors remained concerned about a prolonged conflict in the Middle East and continued supply disruptions through the Strait of Hormuz.

Iran’s foreign minister said the country is reviewing a US proposal to end the war but does not intend to engage in direct talks, while US President Donald Trump responded with a sharp escalation in rhetoric, urging Tehran to be serious about reaching an agreement and warning that he could decide at any time to abandon negotiations.

US President Donald Trump also announced on Thursday that he would extend the pause on attacks against Iranian oil facilities by an additional 10 days, through April 6, at the request of the Iranian government.

In trading, Brent crude futures for May delivery rose 5.7%, or $5.79, to settle at $108.01 per barrel.

US Nymex crude futures for May delivery also rose 4.61%, or $4.16, to close at $94.48 per barrel.

The war in the Middle East has caused severe disruptions to global oil and gas supply chains, with damage and shutdowns affecting key facilities such as liquefied natural gas plants, refineries, and fuel storage sites. This has pushed estimated repair costs to around $25 billion so far, according to Rystad Energy, with expectations of further increases.

Estimates suggest that the largest share of these costs will be directed toward engineering and construction work, followed by spending on equipment and materials.

Qatar bears the brunt of the damage

Ras Laffan Industrial City has been the hardest hit, with the destruction of LNG trains S4 and S6 forcing a declaration of force majeure and reducing production capacity by 17%, equivalent to 12.8 million tons per year.

Despite the scale of required investment, full recovery could take up to five years due to limited availability of large gas turbines needed for operations, which are produced by only three global companies and already face multi-year backlogs driven by demand from data centers and the energy transition.

Structural constraints hinder recovery

Recovery of the Gulf’s energy sector is not expected to depend solely on financing but also on structural constraints, as some facilities can be repaired within months while others may remain offline for years.

Two cases stand out as particularly concerning:

South Pars field in Iran

Ras Laffan facility in Qatar

In Iran, sanctions further complicate the situation, forcing reliance on domestic and Chinese companies, which could slow repair efforts and increase costs.

Bahrain and the impact of timing

In Bahrain, the Sitra refinery operated by Bapco sustained significant damage after being targeted twice, affecting distillation units and storage tanks.

The issue is compounded by the timing of the attack, as it came shortly after the completion of a $7 billion upgrade project, disrupting newly added capacity and delaying expected returns.

Varying levels of damage across the region

Other countries, including the United Arab Emirates, Kuwait, Iraq, and Saudi Arabia, experienced less severe disruptions, but the speed of recovery depends heavily on the strength of local engineering and contracting capabilities.

Saudi Aramco provides a notable example, having resumed operations quickly at the Ras Tanura facility thanks to pre-established maintenance teams.

Priorities for the next phase

Companies are expected to focus in the coming phase on:

Restarting existing fields rather than developing new projects

Accelerating inspection, engineering, and commissioning work

Increasing demand for contractors and equipment suppliers

Amid ongoing sanctions, local and Asian firms are likely to secure the largest share of reconstruction work in Iran.

The pace of recovery remains dependent on execution capacity and equipment availability, as well as developments in the war itself, which could delay a return to pre-conflict production levels for an extended period.

Wall Street’s main indices fell on Thursday after gains in the previous session, as investors remained cautious amid mixed signals from the United States and Iran regarding prospects for easing tensions in the Middle East.

The Dow Jones Industrial Average declined by about 202 points, or 0.45%, while the S&P 500 fell 0.77% and the Nasdaq dropped 1.05%.

A senior Iranian official said the US proposal to end the nearly four-week war is “one-sided and unfair,” while stressing that the diplomatic path has not ended despite the absence of a realistic plan for peace talks.

Analysts said uncertainty remains the main driver of market volatility, as it is still unclear whether real negotiations are taking place between Washington and Tehran, leading markets to move up and down repeatedly. Despite this, markets remain relatively resilient due to investors’ fear of missing potential gains if the war comes to an end.

Technology stocks weigh on the market

Technology stocks came under heavy pressure, with the sector falling about 1.2%, while the Philadelphia Semiconductor Index declined around 2.7% after three sessions of gains.

Shares of Meta and Google also fell following a court ruling related to social media addiction cases, weighing on the communication services sector.

Energy rises with oil gains

In contrast, oil prices rose more than 4%, supporting the energy sector to become the best-performing sector within the S&P 500.

The Organisation for Economic Co-operation and Development warned that escalating conflict and the closure of the Strait of Hormuz could lead to a sharp rise in inflation and negatively affect global growth.

Federal Reserve under pressure

These developments have placed central banks, led by the US Federal Reserve, in a difficult position regarding interest rates, as markets no longer expect any rate cuts this year after previously anticipating two cuts before the war.

Economic data showed a slight increase in jobless claims, indicating continued strength in the labor market, giving the Federal Reserve room to maintain its current policy stance while monitoring developments in the crisis.

Notable stock moves

Shares of Olaplex surged 51% after Henkel agreed to acquire the company for $1.4 billion.

Gold mining stocks declined as gold prices fell more than 1%.

Overall, declining stocks outnumbered advancing ones on both the New York Stock Exchange and Nasdaq, reflecting the cautious sentiment dominating investors amid ongoing geopolitical uncertainty.