The U.S. dollar reached its highest level against the yen in over seven months on Thursday, following reaffirmation of policy divergence by the heads of the respective central banks. Meanwhile, Sweden’s crown plummeted to a historic low after the Riksbank made a modest increase to its policy rate.
During a panel discussion, Federal Reserve Chair Jerome Powell, along with European Central Bank President Christine Lagarde, Bank of Japan Governor Kazuo Ueda, and Bank of England Governor Andrew Bailey, indicated the likelihood of two rate rises this year. Powell did not dismiss the possibility of a hike in July.
The dollar’s surge, which has seen it rise by as much as 11.6% since late March, resulted in heightened verbal warnings from Japanese government officials this week, who expressed concerns over the rapidity of the currency’s movement. Last autumn, the Ministry of Finance and the Bank of Japan intervened in the market when the dollar surpassed 145 yen. Currently, the dollar is down 0.1%, at 144.24 yen.
The U.S. dollar index, which measures the currency against major peers like the yen, euro, and sterling, remained flat at 102.94.
Sweden’s crown briefly touched a record low of 11.829 per euro after the Riksbank raised its key interest rate and accelerated its bond sales as part of quantitative tightening (QT). The crown has stabilized slightly and is now at 11.77 per euro.
The euro showed little change at $1.0908, following mixed inflation data from German states and Spain ahead of the upcoming euro area figure.
Despite the People’s Bank of China (PBOC) setting a stronger-than-expected official rate, the Chinese yuan weakened towards a seven-month low, reflecting the PBOC’s discomfort with recent declines. The dollar gained 0.1%, reaching 7.2479 yuan in the offshore market, nearing the previous day’s 7-1/2-month low of 7.2694.
