Dollar hits 5-year high versus yen, euro sags amid Ukraine uncertainty

New York

THE dollar rose on Friday (Mar 11), notching a 5-year high against the safe-haven yen, while commodity-linked currencies slumped after Russian President Vladimir Putin said there had been some progress in talks between Moscow and Ukraine.

Russia's Feb 24 invasion of Ukraine has roiled markets, causing volatility in commodity prices and threatening global economic growth prospects.

The dollar initially declined on the news, but then gradually firmed and was last up 0.76 per cent against a basket of 6 global peers at 99.11. The index was on track for a 0.56 per cent increase for the week, following the previous week's 2 per cent rise, which was its largest weekly percentage gain since April 2020.

The greenback hit a 5-year high against the Japanese yen, which was down 1.03 per cent at 117.32 yen.

The dollar has also been supported by expectations that the Federal Reserve will start raising interest rates at the end of its Mar 15 to 16 policy meeting, with inflation running hot.

While the US central bank is all but certain to hike rates from the Covid-19 pandemic low, the Bank of Japan, which also holds a policy meeting this week, is set to remain an outlier.

The euro slid 0.69 per cent against the greenback to US$1.0912, erasing gains from the overnight session and putting it on track to end the week slightly lower for what would be its sixth-straight weekly loss. The single currency has fallen more than 2.5 per cent against the US dollar in March.

After hitting a nearly 2-year low last Monday amid growing stagflation worries arising from the Ukraine war, the euro received some support from the European Central Bank's announcement that it will phase out its stimulus, opening the door to an interest rate hike before the end of 2022.

Commodity-linked currencies, including the Australian dollar and the New Zealand dollar, were lower versus the greenback, with the Aussie and the kiwi both down 0.8 per cent. REUTERS