The US dollar slipped from 20-year highs against a basket of currencies on Friday, but posted the best month in seven years as concerns about the global economy and a hawkish US Federal Reserve bolstered demand for the greenback.
The US dollar hit a 20-year high against the yen on Thursday, as the Japanese currency was hurt by dovish Bank of Japan policy. It also hit a five-year high against the euro, which has dropped sharply since Russia’s invasion of Ukraine, with investors concerned about Europe’s energy security, inflation and growth.
The greenback gave back some of those gains on Friday as investors took profits, but still ended the month strong.
“We’ve seen some broad-based dollar strength,” said Vassili Serebriakov, a foreign exchange strategist at UBS in New York. “There is a general story, which has more to do with concerns about the global cycle and that helps the dollar through risk aversion, but then there are some idiosyncratic stories like dollar/yen.”
Concerns about global growth have increased as China enacts lockdowns in a bid so stop the spread of COVID-19. China’s capital, Beijing, closed more businesses and residential compounds on Friday, with authorities ramping up contact tracing to contain a COVID-19 outbreak, while resentment at the month-long lockdown in Shanghai grew.
In Taipei, the New Taiwan dollar rose against the greenback, gaining NT$0.045 to close at NT$29.480, down 0.8 percent for the week.
The US dollar index against a basket of currencies fell 0.4 percent to 103.21 on Friday, after reaching 103.93 on Thursday, which was the highest since Dec. 2002.
It is up 4.76 percent on the month, the biggest gain since January 2015.
The yen was ¥129.32, after reaching ¥131.24 on Thursday, the weakest since April 2002.
The US dollar gained 6.41 percent against the Japanese currency last month, the best month since Nov. 2016.
The Bank of Japan on Thursday strengthened its commitment to keep interest rates ultra-low by vowing to buy unlimited amounts of bonds daily to defend its yield target, triggering a fresh sell-off in the yen.
The euro was US$1.0569, after dropping to US$1.0470 on Thursday, the lowest since Jan. 2017. The single currency has dropped 4.51 percent this month, the most since Jan. 2015.
The greenback briefly pared losses after data on Friday showed that US consumer spending increased more than expected in March amid strong demand for services, while monthly inflation surged by the most since 2005.
Additional reporting by CNA, with staff writer
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