Dollar slips, but posts best month since 2015

THE dollar slipped from 20-year highs against a basket of currencies on Friday (Apr 29), but posted the best month in 7 years as concerns about the global economy and a hawkish Federal Reserve bolstered demand for the greenback. The dollar hit a 20-year high against the yen on Thursday, as the Japanese currency was hurt by dovish Bank of Japan policy. It also hit a 5-year high against the euro, which has dropped sharply since Russia’s invasion of Ukraine, with investors concerned about Europe’s energy security, inflation and growth.

The greenback gave back some of those gains on Friday as investors took profits, but still ended the month strong. “We’ve seen some broad-based dollar strength,” said Vassili Serebriakov, an FX strategist at UBS in New York.

Concerns about global growth have increased as China enacts lockdowns in a bid so stop the spread of Covid-19. Beijing closed more businesses and residential compounds on Friday, with the authorities ramping up contact tracing to contain a Covid-19 outbreak, while resentment at the month-long lockdown in Shanghai grew.

The dollar index against a basket of currencies was last 102.94, after reaching 103.93 on Thursday, which was the highest since December 2002. It is up 4.76 per cent on the month, the biggest gain since January 2015. The yen was 129.32, after reaching 131.24 on Thursday, the weakest since April 2002. The dollar gained 6.41 per cent against the Japanese currency in April, the best month since November 2016. The Bank of Japan on Thursday strengthened its commitment to keep interest rates ultra-low by vowing to buy unlimited amounts of bonds daily to defend its yield target, triggering a fresh sell-off in the yen.

The euro was US$1.0569, after dropping to US$1.0470 on Thursday, the lowest since January 2017. The single currency has dropped 4.51 per cent last month, the most since Jan. 2015. The greenback briefly pared losses after data on Friday showed that US consumer spending increased more than expected in March amid strong demand for services, while monthly inflation surged by the most since 2005.

The British pound rose to US$1.2598, after dropping to US$1.2410 on Thursday, the weakest since July 2020. It lost 4.24 per cent this month, the most since October 2016. REUTERS