TOKYO: The dollar broadly rose against its major peers Friday as a key Federal Reserve meeting draws closer with policymakers expected to announce a long-awaited interest rate hike.
The US central bank appears all but certain to announce a rise in near-zero borrowing rates at its meeting next week -- the first in nine years -- on the back of a firm recovery in the world's top economy.
A rate hike is a plus for the dollar, which was hit by a wave of selling this week as tumbling oil prices and worries about the global economy sent investors into the yen, while the euro was lifted by disappointing eurozone stimulus measures.
There was also speculation that the hotly anticipated Fed policy moves were already priced into the dollar after a months-long ascent.
"There have been some positive signs that perhaps the worst of the pre-rate rise selloff may be behind us," Angus Nicholson, a market analyst with IG Ltd, said in a commentary.
Higher interest rates attract investors seeking better returns to dollar-denominated assets.
The Bank of Japan also holds its last policy meeting of the year next week. But an upbeat revision in third quarter GDP have tempered expectations for more stimulus.
In Tokyo, the dollar rose to 122.10 yen from 121.62 yen Thursday in New York, although it was still down from levels above 123 yen on Monday.
The euro drifted lower to $1.0931 from $1.0939 in US trade and above $1.10 on Thursday, while it edged up to 133.47 yen from 133.04 yen.
The single currency has held most of the gains it logged after the European Central Bank last week announced a stimulus revision that fell well short of expectations.
"Central banks are all hoping the Fed's imminent tightening will weaken their domestic currencies against the greenback," Mansoor Mohi-uddin, senior markets strategist at Royal Bank of Scotland, told Bloomberg News.
"They're holding back on meeting the market's expectations for further easing."
China's yuan, or renminbi, slumped further as Beijing struggles with an outflow of capital and slowdown in the economy.
The unit was at 6.4504 on the dollar against 6.439 and well off the 6.395 at the beginning of the week.
Petroleum-linked currencies took a hit as prices fell again with the Malaysian ringgit down 0.22 percent against the dollar.
The greenback, however, slipped against some riskier emerging market currencies.
The Thai baht ticked up 0.15 percent, the Taiwan dollar added 0.10 percent and the South Korean won gained 0.07 percent.
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