US dollar extends retreat as Yellen comments linger

[TOKYO] The dollar retreated against most emerging currencies Thursday, with the South Korean won rising sharply as the prospect of low US interest rates boosting demand for higher-yielding assets.

The greenback's slide comes after Federal Reserve chief Janet Yellen on Tuesday signalled that rates were unlikely to rise in the first half of this year.

The Fed chief, citing ongoing concerns about the weak global economy and its impact on the United States also hinted that when the central bank does tighten policy, it will be slow and gradual.

The Fed in December lifted rates in the world's largest economy for the first time in nearly a decade.

Trader attention is now shifting to key data in China and the United States.

Chinese March manufacturing activity are set for release on Friday and will provide the latest snapshot of the world's second-largest economy. That is followed by closely watched official US jobs figures later in the day.

On Thursday, the South Korean won rose 0.59 per cent while the oil-linked Malaysian ringgit advanced 0.34 per cent. The Singapore dollar gained 0.11 per cent and Canada's dollar was up 0.3 per cent.

"We're seeing many investors unwinding their long-dollar bets," Bernard Aw, a strategist at IG in Singapore, told Bloomberg News.

"Even if the Fed raises a second time in June, there is still limited upside room for it to go higher," Mr Aw added.

"Monetary conditions have tightened because of a stronger dollar." The dollar fell to 112.31 yen from 112.41 yen in New York Wednesday, while the euro dropped to US$1.1318 and 127.12 yen from US$1.1337 and 127.44 yen.

AFP