Dollar scales 6-month peak against yen on US rate expectations

Singapore, May 23 (BNA): The dollar touched a six-month high against the Japanese yen on Tuesday as expectations grew that US interest rates would remain high for longer and the debt ceiling crisis kept risk sentiment fragile.

Among the slew of Fed heavyweights who spoke on Monday, some hinted that the central bank still has more to go in tightening monetary policy, Reuters reported.

Minneapolis Fed President Neel Kashkari said US interest rates may have to move “above 6%” for inflation to return to the Fed’s 2% target, while St. Louis Fed President James Bullard said the central bank may He still needs to raise another half- point this year.

Against the Japanese yen, the dollar rose to a near six-month high of 138.88 in Asian trade, reflecting the stark contrast between the still-hawkish Fed and the ultra-dovish Bank of Japan. The dollar was last down 0.11 percent at 138.44 yen.

Money markets are pricing in a roughly 20% chance that the Fed will deliver another 25 basis point hike next month and trim expectations for Fed rate cuts later this year, with rates still above 4.7% by December.

The euro slipped 0.05% to $1.0808 and is down nearly 2% for the month so far against the strong dollar, reversing two consecutive months of gains.

The British pound remained largely unchanged at $1.2436.

ZHB