Dollar hits 13-1/2 year high, U.S. bond yields gain on Trump stimulus bets
The dollar sprinted to a more than 13-1/2 year high against a basket of major currencies on Friday and U.S. debt yields hit near one-year highs on expectations that President-elect Donald Trump's policies will boost the U.S. economy.
But the post-election shift in expectations has left many emerging market currencies and assets vulnerable if investors rotate more funds back to the United States.
The dollar's rising yield attraction is lifting the U.S. currency, which rose to 110.34 yen JPY=, its highest level since early June. The euro EUR= slumped to $1.0620, a low last seen almost a year ago.
The dollar's index against a basket of six major currencies .DXY =USD rose above its "double top" touched in March and December of 2015. The index now stands at its highest level since April 2003.
It’s Friday, So Asian Central Banks Are Back in Currency Markets
Indian and Malaysian central banks are stepping into foreign-exchange markets again to steady currencies pressured by signs the U.S. will have to raise rates faster than expected to contain inflation.
Bank Negara Malaysia Assistant Governor Adnan Zaylani said on Friday the monetary authority was intervening after the ringgit dropped to a 10-month low. Indian state-run lenders sold dollars, probably on behalf of the Reserve Bank of India, according to two Mumbai-based traders who didn’t want to be identified. Developing-nation currencies have tumbled after Donald Trump’s upset win in the U.S. presidential election on Nov. 8, as indications he will spend on domestic infrastructure revived demand for the greenback.
While many nations worldwide -- developed and emerging -- had fretted in recent years that too-strong currencies were crimping exports, the ferocity of the post-Trump dollar rally has spurred Asia’s policy makers to step in to minimize the potential for disruption. Indonesia’s central bank intervened a week ago after the rupiah dropped as much as 3 percent. Malaysia’s central bank said the same day it would manage volatility and India’s central bank was said to be buying rupees.
While many nations worldwide -- developed and emerging -- had fretted in recent years that too-strong currencies were crimping exports, the ferocity of the post-Trump dollar rally has spurred Asia’s policy makers to step in to minimize the potential for disruption. Indonesia’s central bank intervened a week ago after the rupiah dropped as much as 3 percent. Malaysia’s central bank said the same day it would manage volatility and India’s central bank was said to be buying rupees.
Malaysia’s ringgit has weakened 4.9 percent since Nov. 8 and South Korea’s won has dropped 4 percent. Indonesia’s rupiah lost 2.6 percent, the Philippine peso fell 2.3 percent and India’s rupee declined 2.2 percent.
Oil prices fall as strong dollar wipes out OPEC cut optimism
Oil prices fell in early trading on Friday as the strengthening U.S. dollar snuffed out rekindled hopes that OPEC might agree production cuts.
International Brent crude oil futures LCOc1 were trading down 13 cents at $46.36 per barrel at 0445 GMT, from their last close.
U.S. West Texas Intermediate (WTI) crude oil futures CLc1 were trading at $45.19 per barrel, down 23 cents, or 0.51 percent, from their last settlement.
Reference: Reuters,Bloomberg
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