A gauge of the dollar rose toward a five-year high after Federal Reserve Chair Janet Yellen indicated the central bank is on pace to increase interest rates as early as April.
The greenback gained for a second day against the yen after Fed officials yesterday replaced a pledge to keep borrowing costs near zero for a “considerable time,” and held the rate at zero to 0.25 percent, where it’s been since 2008. Russia’s ruble snapped a seven-day drop as the finance ministry said it was selling reserves to counter a plunge that sent the currency to a record amid a slide in oil prices.
“The Fed meeting clarified that rate hikes will start by mid-next year, giving a big boost to the dollar,” said Etsuko Yamashita, chief economist at Sumitomo Mitsui Banking Corp. in New York. “The Fed indicated that the decline in oil will boost spending more than hurt inflation.”
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major currencies, rose 0.1 percent to 1,122.19 at 9:27 a.m. in Tokyo from yesterday, when it strengthened 0.9 percent. It closed at 1,122.34 on Dec. 5, the highest since March 2009.
The dollar rose 0.2 percent to 118.84 yen, after surging 1.9 percent yesterday, the biggest gain since October. The U.S. currency was little changed at $1.2328 per euro following yesterday’s 1.4 percent advance. The yen slipped 0.1 percent to 146.51 per euro.
Source: Bloomberg (18 Dec 2014)
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