The US dollar had its biggest monthly gain against a basket of peers since May as a global selloff of emerging-market currencies prompted investors to seek the relative safety of haven assets.
The yen gained versus the dollar for the first time in six months as the global rout spurred investors to reverse carry trades. The Argentine peso and Hungary’s forint were last month’s two biggest emerging-market losers. The greenback climbed versus all 31 major peers except the yen as the Federal Reserve scaled back monthly bond purchases a second time, citing labor-market improvements. US payrolls gains more than doubled last month, according to a Bloomberg survey before next week’s report.
“The dollar has benefited from the broad-based flight out of risk assets and into safer ones,” Omer Esiner, chief market analyst in Washington at the currency brokerage Commonwealth Foreign Exchange Inc, said on Friday in a phone interview. “That we didn’t really get even an acknowledgment of the selloff in emerging markets by the Fed shows that it sees little risk of contagion at this point, which is also dollar-positive.”
The Bloomberg Dollar Spot Index, which monitors the greenback against 10 major counterparts, climbed 1.2 percent last month to 1,031.57 in New York. The US dollar appreciated 1.9 percent to US$1.3486 per euro and touched US$1.3479 on Friday, its strongest level since Nov. 22. The US currency dropped 3.1 percent to ￥102.04, the biggest slump since April 2012. The Japanese currency rose 5.2 percent to ￥137.63 per euro.
The Hungarian forint led all emerging-market decliners this week as Gyula Pleschinger, a member of the central bank’s Monetary Council, said on Wednesday that the currency has depreciated “too fast, too big” and that the central bank is monitoring its move and the market environment. The currency slipped 3.8 percent this week, pushing its monthly drop to 6.6 percent.
Poland’s zloty was the second-biggest decliner this week, falling 2.7 percent to extend its monthly decline to 4.1 percent. Russia’s ruble posted gains on just four days last month as it sunk 6.5 percent.
The yen was boosted on Friday by a report showing that Japan’s December core consumer prices rose 1.3 percent from a year earlier, compared with the median estimate for a 1.2 percent gain in a Bloomberg News survey.
An equally weighted basket of the so-called BRICS emerging-market currencies, consisting of Brazil, Russia, India, China and South Africa, fell against the yen to its lowest level since Nov. 13.
Hedge funds and other large speculators trimmed bets the yen will weaken versus the dollar, according to data from the Commodity Futures Trading Commission. The difference in the number of wagers on a decline in the currency compared with those on a gain — so-called net shorts — was 86,192 as of Jan. 28, compared with 114,961 a week earlier.
“Better Japanese data suggests reduced chance of more Bank of Japan easing this spring,” Jane Foley, senior currency strategist at Rabobank International in London, said in an interview on Friday. “The trouble in emerging markets could also remain a factor for some weeks and that should provide some support for the yen in the near term.”
The pound weakened for a fourth day against the dollar on Friday, headed for its first monthly decline since October, even as a report showed a gauge of UK consumer confidence climbed to the highest level in more than six years last month.
The pound fell 0.2 percent to US$1.6450, having dropped 0.7 percent last month. Sterling gained 0.2 percent to ￡0.8207 per euro after appreciating to ￡0.8168 on Jan. 22, the strongest level since Jan. 10 last year. It rose 1.2 percent versus the euro last month.
Sterling gained 10 percent in the past year, the best performer among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The euro rose 5 percent and the dollar strengthened 5.7 percent.
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