U.S. dollar rises against major currencies on mixed central bank policies
Date
6/24/2024 5:33:59 AM
(MENAFN) The US dollar surged to its highest level in eight weeks, surpassing 159 yen, and remained near a five-week peak against the pound sterling on Friday. This upward momentum in the dollar was fueled by a divergence in monetary policy stances between the Federal Reserve and other central banks, which are leaning towards interest rate reductions.
The dollar index, a measure of the greenback's performance against a basket of six major currencies, climbed 0.41 percent overnight, reversing the declines witnessed earlier in the week. This reversal followed the Swiss National Bank's decision to implement its second consecutive interest rate cut, coupled with indications from the Bank of England hinting at a potential rate cut in August.
Conversely, the Japanese yen struggled to gain ground as the Bank of Japan refrained from reducing its bond purchasing program during its recent meeting. This decision came amid pressure from the Japanese Ministry of Finance, prompting the central bank to intervene in currency markets. The Bank of Japan reportedly spent approximately 9.8 trillion yen (USD61.64 billion) to bolster the yen, which had weakened to its lowest level in 34 years against the dollar on April 29.
Despite the initial gains, the dollar saw a slight decline in recent transactions against the yen, slipping by 0.04 percent to 158.875 yen after earlier reaching 159.12 yen. Meanwhile, against the Swiss franc, the dollar settled at 0.8909 Swiss francs, reflecting a 0.78 percent increase from the previous session.
The dynamics in the foreign exchange market highlight the impact of diverging central bank policies on currency movements, with the US dollar benefiting from the Federal Reserve's cautious stance on interest rates amidst contrasting approaches adopted by other major central banks.
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