The US dollar index on Friday bounced back from recent declines as US Federal Reserve officials said the central bank might need to be more aggressive to deal with inflation, while the US dollar hit a fresh six-year high against the yen.
The US dollar also rose 0.1 percent versus China’s offshore yuan at 6.3716 yuan, registering little change following US President Joe Biden’s video call with Chinese President Xi Jinping (習近平), where Biden sought to prevent Beijing giving new life to Russia’s invasion of Ukraine.
The talks, which ended without big surprises, helped boost stocks on Wall Street, especially in the technology sector.
Two of the Fed’s most hawkish policymakers said the central bank needs to take more aggressive steps to combat inflation. A third, who just six months ago was the US central bank’s most dovish member, said he was open to that possibility.
The Fed on Wednesday hiked interest rates by one-quarter of a percentage point in an effort to tame inflation at 40-year highs. It was the first hike in three years, and the Fed also signaled that more rate increases are coming.
St Louis Fed President James Bullard, who dissented on this week’s action in favor of a half-point increase, on Friday said that officials should raise the Fed’s overnight lending rate to more than 3 percent this year.
“For the dollar, hawkish Fed speak has put some wind back in its sails,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.
“It’s playing up the more hawkish outlook for Fed policy. While the Fed was hawkish this week, their outlook for rates was still generally in line with market expectations,” Manimbo said.
The US dollar index rose 0.26 percent to 98.23, but was well off its highs of the session, after declining for the past four days. The index fell 0.9 percent for the week.
In Taipei, the New Taiwan dollar on Friday rose against the greenback, gaining NT$0.096 to close at NT$28.360, up 0.15 percent for the week.
The US dollar on Friday rose 0.4 percent against the Japanese yen and hit a fresh six-year high.
The Bank of Japan left its ultra-accommodative policy settings unchanged, as widely expected, leaving it an outlier among developed-world central banks which are exiting COVID-19 pandemic emergency measures.
The euro weakened as investors assessed developments in the Ukraine-Russia conflict, including news that Russia paid interest due on two sovereign US-dollar bonds.
The euro declined 0.4 percent to US$1.1054, but rose 1.3 percent for the week in its biggest weekly percentage gain since the first week of last month, when European Central Bank President Christine Lagarde signaled for the first time that interest rates will rise in the eurozone in this year.
Additional reporting by CNA, with staff writer
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