Dollar Rise, Yen Falls to 1998 Lows

LONDON (Reuters) – The safe-haven dollar surged toward two-decade highs against rival currencies on Monday, boosted by fears of a global economic slowdown and bets that the US Federal Reserve will raise interest rates.

The yen was among a group of currencies that fell during the day, to its lowest level against the dollar since 1998, as the gap between Japanese and US benchmark yields widened after hot US inflation data on Friday. Read more

The market sell-off saw European stocks fall for the fifth consecutive session, while bitcoin tumbled 9% to an 18-month low around $24,000. Read more

The dollar index – which measures the greenback against six major peers – rose 0.5% on the day to 104.75, close to a two-decade peak of 105.01 hit in May. The latest rise was 0.2% at 104.63.

Central banks’ efforts to curb hyperinflation will remain in focus this week.

The Federal Reserve and the Bank of England are expected to raise interest rates at their meetings and there is a chance that the Swiss National Bank will do the same.

The Bank of Japan (BoJ) has so far resisted pressure to tighten policy, weakening the country’s currency. The divergence in policy has caused the yen to fall more than 15% against the dollar since early March.

The yen fell 0.6% on the day to 135.22 yen to the dollar, its lowest level since 1998. It last settled on a broad scale at 134.37 yen per dollar.

A Japanese government spokesperson said Monday that Tokyo is ready to “respond appropriately” if necessary. Read more

“Overall, fundamental developments continue to favor further yen weakness in the near term, but market participants will be more cautious about the risks of intervention and/or a hawkish shift in BoJ policy in the coming week,” MUFG currency analysts said. note.

The note added that downward pressure on the yen may encourage speculation of a return to yen weakness not seen since the Asian financial crisis in 1997, when it reached 140.00 – the last time Japan intervened directly to prop up the currency.

The Euro, the British Pound and the Swiss Franc fell to nearly four-week lows against the Dollar during the day.

The euro was down 0.5% at $1.04,560, and was last down 0.3% at $1.04,775.

Sterling fell 0.8 percent to $1.22165 after data showed Britain’s economy unexpectedly contracted in April. Read more

The Swiss franc fell as much as 0.5% to 0.99230 francs per dollar.

(Reporting) Ian Withers (Additional reporting) By Alun John in Hong Kong Editing by Mark Potter

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