Dollar picks up on rate hike speculation

GMT 09:35 2015 Tuesday ,21 July

Arab Today, arab today Dollar picks up on rate hike speculation

Dollar picks up on rate hike
Tokyo - AFP

The dollar climbed Tuesday to a five-week high against the yen and held its euro gains on growing expectations the US Federal Reserve will raise interest rates this year.

In Tokyo afternoon trading, the greenback was sitting at 124.43 yen, its strongest level since mid-June, compared with 124.30 yen in New York on Monday.

The euro bought $1.0823 and 134.69 yen, against $1.0824 and 134.55 yen.

Markets are keeping a close eye on the Fed as it considers its first rate rise since 2006 as the US economy gets back up to speed.

Last week Fed chief Janet Yellen said she saw a rise taking place before 2016 -- a rate hike is a plus for the dollar.

Talk of the rise comes as the Bank of Japan and European Central Bank spend hundreds of billions of dollars on bonds and other assets to support their respective economies, pushing down the value of the yen and euro.

"The dollar-buying trend became clearer" after Yellen's comments, said Keisuke Hino, a foreign-exchange trader at Mizuho bank.

The yen was under pressure after minutes from the Bank of Japan's policy board meeting last month showed some members expect the nation's recovery to slow temporarily in the second quarter.

Last week, Japan's central bank cut its economic growth and inflation forecasts, as analysts warned over a disappointing April-June quarter that underscores the wobbly success of Prime Minister Shinzo Abe's policies to revive the economy.

Investors were also eyeing the situation in Greece where the government hiked taxes and paid billions of euros to its creditors on Monday, as banks reopened just days after the debt-laden country reached a bailout deal with its creditors.

The dollar was broadly stronger against a basket of Asia-Pacific currencies.

It advanced to 1,158.63 South Korean won from 1,152.78 on Monday, to 63.74 Indian rupees from 63.54, to 13,409 Indonesian rupiah from 13,380 rupiah, to 45.31 Philippine pesos from 45.29, to 34.48 Thai baht from 34.32 and to Tw$31.24 from Tw$31.16.

It weakened to Sg$1.3699 from Sg$1.3712.

The Australian dollar bought 73.50 US cents, down from 73.58 cents, while the Chinese yuan rose to 20.04 yen from 19.99.

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