US dollar ticks up despite rate hike fears
The U. S. dollar ticked higher Tuesday despite comments from a Federal Reserve official that cast doubt on a mid-year interest rate hike, while Greece’s bailout woes held back the euro.
In Tokyo, the greenback bought 119.44 yen, up from 119.22 yen in New York and sharply higher from 118.62 yen in Tokyo earlier Monday.
The euro was mixed, slipping to US$1.0734 from US$1.0741 while it strengthened to 128.20 yen against 128.05 yen in U.S. trade.
The rise in the U.S. dollar came despite a key Federal Reserve official suggesting a U.S. rate hike could be pushed back beyond mid-year.
New York Fed President William C. Dudley said recent inflation data was not strong enough to warrant a near-term rise, even though economic growth was healthy.
“The Fed will likely start tightening later in the year, and there’s a strong appetite in Japan for foreign portfolio and direct investments,” said Taisuke Tanaka, Deutsche Bank’s chief currency strategist in Tokyo.
“We continue to recommend buying the dollar-yen on dips.”
The euro remained under pressure after falling Monday on growing worries about Greece’s future in the eurozone, as Athens looks to secure billions of euros in bailout cash to pay its enormous debts.
With its creditors refusing to extend a repayment deadline while also haggling over its bailout reforms, the Greek government has ordered all public agencies to hand over their financial reserves.
“Markets are recognising Greece as a risk factor as everybody knows the tight financing situation,” Keisuke Hino, a foreign-exchange trader at Mizuho Bank, told Bloomberg News.
“Markets expect a default to be avoided but they have to keep the risk in mind.” The U.S. dollar strengthened against other AsiaPacific currencies.
It rose to SG$ 1.3505 from SG$1.3447 on Monday, to 1,082.10 South Korean won from 1,081.95 won, and to 32.41 Thai baht from 32.37 baht.
The greenback also firmed to 44.28 Philippine pesos from 44.25 pesos, to 63.03 Indian rupees from 62.54 rupees, and to 12,954.50 Indonesian rupiah from 12,879.00 rupiah.