Greenback firms; yen holds near lowest since 2015

London

THE US dollar strengthened, with the Japanese yen sinking to its lowest since 2015, as the Russia-Ukraine conflict and expectations of central bank tightening kept investors cautious.

Equity markets were volatile, with European stocks slipping, following more hawkish comments from the US Federal Reserve on Wednesday (Mar 23).

Fed policymakers signalled that they could take more aggressive action to bring down inflation, including a possible half-percentage-point interest rate hike at the next policy meeting in May.

The Japanese yen fell against the US dollar for the fifth session in a row, hitting its lowest since 2015, with the Bank of Japan expected to lag policy tightening by other major central banks.

At 1248 GMT, the dollar was up 0.4 per cent on the day versus the yen, at 121.66.

Versus a basket of currencies, the dollar was up 0.2 per cent, trading within recent ranges.

Western leaders meeting in Brussels on Thursday will agree to strengthen their forces in Eastern Europe and increase military aid to Ukraine as the Russian assault on its neighbour entered its second month. In the latest jolt to global energy markets, Russian President Vladimir Putin said that it would soon require "unfriendly" countries to pay for their fuel in Russia's currency, the rouble. German utilities association BDEW warned of a gas crunch.

The euro was down 0.2 per cent on the day at US$1.09785.

Euro zone business growth was stronger than expected this month, a survey showed on Thursday, although prices rose at a record pace, likely adding to pressure on the European Central Bank to raise rates.

Versus the Swiss franc, the euro was down 0.2 per cent at 1.02265, after the Swiss National Bank (SNB) held its policy rate at -0.75 per cent, bucking the trend of other central banks which have started hiking interest rates to tackle rising inflation. The SNB said the franc remains highly valued and that it will remain active in foreign exchange markets as necessary.

The euro was down 0.9 per cent on the day versus the Norwegian krone at 9.47.

Commodity currencies slipped, with the Australian dollar down 0.1 per cent on the day at US$0.79151. The New Zealand dollar was down 0.4 per cent at US$0.695. REUTERS