Greenback hits fresh 20-year high against yen

London

THE US dollar rose on Tuesday (Apr 19) to a fresh 20-year high against the Japanese yen and tested a 2-year peak against the euro, supported by high US Treasury yields.

Ten-year US inflation-linked bond yields are within touching distance of turning positive for the first time in 2 years.

The dollar index, which measures the greenback against 6 other currencies, climbed past 101 for the first time in more than 2 years. It was flat at 100.84 at 1155 GMT.

The dollar's gains have been most striking against the yen, climbing to its highest level of 128.46 yen against the Japanese currency since May 2002. It was last up 1.3 per cent at 128.20 yen.

The dollar has risen 5.4 per cent on the yen so far this month, which would be its second-biggest monthly percentage gain since 2016 after last month's 5.8 per cent. The greenback rose to its highest of 0.9492 since July 2020 against the Swiss franc.

The euro recovered some grounds, trading 0.1 per cent higher against the dollar at US$1.07935, but stayed just off last week's 2-year low of US$1.0756.

Expectations that the US Federal Reserve will tighten its monetary policy have continued to provide support to the dollar. US inflation is "far too high", St Louis Federal Reserve Bank President James Bullard said on Monday, as he repeated his case for increasing interest rates to 3.5 per cent by the end of the year.

In the meantime, the Bank of Japan has been intervening to keep the yield on Japanese 10-year government bonds around zero per cent and no higher than 0.25 per cent. Many investors are betting the yen has further to fall. The latest CFTC data for the week ending Apr 12 shows net short yen positions are the largest in 31/2 years.

Japanese Finance Minister Shunichi Suzuki made the most explicit warning against the yen's recent slump on Tuesday, saying the damage to the economy from a weakening currency at present is greater than the benefits from it.

Elsewhere, sterling was flat at US$1.3019, in sight of its 17-month low against the dollar of US$1.2973, hit last week.

The Australian dollar briefly rose to US$0.740 from Monday's 1-month low. REUTERS