Dollar hits 1-month high against yen

SINGAPORE: The dollar climbed to a one-month high against Japan’s yen on Monday as traders eyed up another interest rate hike from the Federal Reserve, while the Bank of Japan stuck to its easy-money policies for now.

The dollar rose to 134.22 yen earlier in the session, the highest level since March 15. It was last up 0.19 per cent at 134 yen, Reuters reported.

Meanwhile, the dollar index - which measures the currency against six major peers - was little changed at 101.66. It touched a one-year low of 100.78 on Friday before rebounding somewhat.

“The dollar has bounced back but also we’ve had comments from the Bank of Japan indicating that there is no real reason for them to pull back from their ultra easy policy,” said Jane Foley, head of FX strategy at Rabobank.

Expectations that interest rates will rise relative to global peers tend to boost a country’s currency by making investments there look more attractive, and vice versa.

New Bank of Japan Governor Kazuo Ueda last week made clear that the country would remain a “dovish” outlier by keeping interest rates at ultra-low levels for the time being.

Meanwhile, pricing in derivatives markets shows traders think there’s a roughly 86 per cent chance the Fed will hike rates again by 25 basis points in May, up from around 69 per cent last week.