Dollar firms on rate hike speculation
Friday, 6 June 2008
TOKYO, June 5 (AFP): The dollar continued to climb in Asian trade today, hitting a three-week high against the euro on speculation that US interest rates may rise later this year, dealers said.
The dollar gained to 105.55 yen in Tokyo afternoon trade from 105.14 in New York late on Wednesday.
The euro dropped below 1.54 dollars in early Asian trade before recovering to 1.5419, down from 1.5440 in New York. It rose to 162.75 yen from 162.38.
The greenback was supported by growing expectations that US interest rates have bottomed, following fresh remarks from Federal Reserve chairman Ben Bernanke expressing concern about inflation, dealers said.
Bernanke said in a speech Wednesday that the record surge in energy costs has created "significant challenges" for the US and world economies although the situation is far different than the oil crisis of the 1970s.
The remarks came a day after Bernanke said a weaker greenback was adding to US inflation pressures, in a rare comment by the Fed chief on currencies.
The Fed next meets on June 24-25 when it is expected to keep rates on hold, having already slashed borrowing costs to 2.00 per cent from 5.25 per cent.
An index of the US service sector by the Institute of Supply Management eased to 51.7 in May from 52.0 in April, but remained in the growth mode above 50 per cent, suggesting a resilient economy.
The dollar gained to 105.55 yen in Tokyo afternoon trade from 105.14 in New York late on Wednesday.
The euro dropped below 1.54 dollars in early Asian trade before recovering to 1.5419, down from 1.5440 in New York. It rose to 162.75 yen from 162.38.
The greenback was supported by growing expectations that US interest rates have bottomed, following fresh remarks from Federal Reserve chairman Ben Bernanke expressing concern about inflation, dealers said.
Bernanke said in a speech Wednesday that the record surge in energy costs has created "significant challenges" for the US and world economies although the situation is far different than the oil crisis of the 1970s.
The remarks came a day after Bernanke said a weaker greenback was adding to US inflation pressures, in a rare comment by the Fed chief on currencies.
The Fed next meets on June 24-25 when it is expected to keep rates on hold, having already slashed borrowing costs to 2.00 per cent from 5.25 per cent.
An index of the US service sector by the Institute of Supply Management eased to 51.7 in May from 52.0 in April, but remained in the growth mode above 50 per cent, suggesting a resilient economy.