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Dollar pushes higher on US rate hike speculation

TOKYO: The dollar marched higher Wednesday, supported by expectations for a mid-year US rate hike and diverging policy paths between the US Federal Reserve and other major central banks.

The US currency’s unrelenting rise saw it jump against a string of global peers, including the euro and yen, while it also advanced against emerging market currencies from the Indonesian rupiah to the Thai baht.

Upbeat jobs data Friday has fanned speculation that the US central bank will follow through on an interest rate hike by June as the world’s top economy continues to show signs of recovery.

On Wednesday, the dollar jumped to 121.49 yen in Tokyo before settling back around 121.22 yen, still up from 121.07 yen in US trade. It had hit a near eight-year high above 122 yen on Tuesday.

The embattled euro bought $1.0695 and 129.68 yen, against $1.0698 and 129.53 yen in New York, after the European Central Bank launched its $1.2 trillion monetary easing campaign this week in a bid to rescue the stumbling eurozone economy.

The last time the euro fell below $1.07 line was in April 2003.

“It’s a stronger US-dollar story,” Peter Dragicevich, a strategist at Commonwealth Bank of Australia, told Bloomberg News.

“The general theme of the stronger dollar and markets positioning and looking to the Fed to raise rates later this year continues to come through.”

The dollar has won support from the Fed’s moves to tighten policy as a string of central banks are moving in the opposite direction and ratcheting up their stimulus, which tends to weaken their currencies.

In other trading, the dollar climbed to 1,126.40 South Korean won from 1,121.05 won on Tuesday, to 44.34 Philippine pesos from 44.28 pesos, to Tw$31.63 from Tw$31.56, to 32.68 Thai baht from 32.63 baht, and to Sg$1.3869 from Sg$1.3860.

The greenback also soared to 13,210.00 Indonesian rupiah, its highest since 1998, from 13,065 rupiah, while the Australian dollar eased to 76.01 US cents from 76.44 cents.

The US unit was slightly weaker at 62.75 Indian rupees from 62.77 rupees.

The Chinese yuan slipped to 19.36 yen from 19.43 yen.

Investors were keeping a close eye on Greece after technical talks on extending Athens’ bailout appeared to falter, and Eurogroup chief Jeroen Dijsselbloem accused the country’s new leaders of wasting time.

After five years of painful austerity, Greece’s leftist government swept to power in January on a hugely popular pledge to refuse all dealings with the troika that saw through the tough reforms during two bailouts since 2010. -AFP

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