Share

Dollar rallies on US rate hike talks

Tokyo - The dollar rallied broadly in Asia on Wednesday as a string of US economic data and bullish commentary from two Federal Reserve policymakers spurred talk of a US interest rate hike.

The greenback surged against emerging market currencies as investors ran for cover after overnight news that US industrial production, consumer prices and housing starts all rose in April.

The US central bank earlier this year said it would not raise rates again - after December's first hike in almost a decade - unless the world's top economy was showing signs of being in good health.

The better-than-expected data led to speculation the US central bank could lift borrowing costs as early as next month, jolting investor confidence.

On Wednesday, the US unit was up against higher-yielding emerging currencies, rising 0.7% against the South Korean won, while also booking healthy gains against the Malaysian ringgit, Singapore dollar and Thai baht. It also rose against the Philippine peso and Taiwan's dollar.

The euro fell sharply to $1.1289 and ¥123.13 from $1.1313 and ¥123.46 on Tuesday in New York.

Talk of a US rate rise also lifted the dollar against the yen to ¥109.21 from ¥109.13 in US trade.

The two Fed officials said in the US on Tuesday they could see two to three rate hikes this year, starting as early as June.

"Fed officials have come out all sounding hawkish and that tone is likely to continue," Naohiro Nomoto, an associate for currency trading at Bank of Tokyo-Mitsubishi UFJ, told Bloomberg News.

"The (Fed policy meeting) minutes aren't likely to be too dovish."

San Francisco Fed chief John Williams said he was confident about the economy and that the pace of growth made two to three increases in 2016 appropriate, beginning as soon as the Fed's June 14-15 policy meeting.

More cautious about the June meeting, Atlanta Fed President Dennis Lockhart said it was too early to draw a firm conclusion about second-quarter economic data.

Markets are now eyeing a meeting between finance ministers and central bankers from the Group of Seven countries starting later this week in northern Japan for fresh trading cues.

US President Barack Obama and other G7 leaders are attending a separate summit in Japan next week.

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.90
+0.2%
Rand - Pound
23.85
+0.2%
Rand - Euro
20.39
+0.2%
Rand - Aus dollar
12.31
+0.2%
Rand - Yen
0.12
+0.2%
Platinum
908.05
0.0%
Palladium
1,014.94
0.0%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders