The US dollar posted its biggest gain since February 1999 against the yen as a better-than-forecast non-farm payrolls report encouraged traders to boost bets on US Federal Reserve interest rate increases.
The yen fell this week against all of its 16 major counterparts on speculation Japan’s currency will regain its status as the primary funding vehicle for higher-yielding investments. The Fed holds its last policy-setting meeting of the year on Dec. 16.
“What the job numbers do is firm up expectations that the Fed interest-rate hike is coming,” said Camilla Sutton, a strategist in Toronto at Bank of Nova Scotia, the nation’s third-largest lender. “That should be a strong-dollar story.”
The US dollar rose 4.7 percent to ¥90.56 this week, the biggest gain since the five-day period ended Feb. 19, 1999, when an unexpected narrowing of the US trade deficit fueled optimism that the economy would expand. The US currency appreciated 0.9 percent to US$1.4858 per euro from US$1.4988. The euro advanced 3.8 percent to ¥134.54 from ¥129.67.
The yen gained 4.3 percent versus the US currency last month, helping to erode profits of exporters including Sony Corp and Toyota Motor Corp. It reached a 14-year high of ¥84.83 against the US dollar last Friday.
The pound gained 0.7 percent in the week to trade at £0.9017 per euro as of 5pm in London on Friday. It climbed 3.9 percent to ¥148.37 and was little changed at US$1.6510.
Sterling has risen 14 percent against the US dollar this year and 6.3 percent versus the euro as investors bet the Bank of England’s interest rate cuts and asset purchases are helping to drag the economy out of its longest recession on record.
Asian currencies gained this week, led by the Philippine peso and South Korea’s won, as signs a regional economic recovery is gathering pace boosted appetite for emerging-market assets.
The won posted its biggest weekly advance in seven months after a government report showed the economy expanded at a faster pace than initially estimated in the third quarter.
The peso strengthened 2.6 percent this week to 46.01 per dollar in Manila, according to Tullett Prebon PLC. The won jumped 1.9 percent to 1,152.93 and the Indonesian rupiah rose 1.3 percent to 9,415, according to data compiled by Bloomberg.
The New Taiwan dollar pared the week’s advance before local elections yesterday that were expected to test support for the Chinese Nationalist Party (KMT).
The NT dollar rose 0.5 percent this week to NT$32.170 per US dollar, compared with NT$32.345 last Friday, according to Taipei Forex Inc.
In other Asian trading, Malaysia’s ringgit rose 0.9 percent to 3.3810 against the US currency this week and the Singapore dollar gained 0.4 percent to S$1.3816. The Thai baht rose 0.4 percent to 33.11 and India’s rupee climbed 0.8 percent to 46.2975.
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