High-flying dollar slips in Asia

AP FILE PHOTO

TOKYO – The dollar retreated in Asia on Monday after surging last week on US Federal Reserve hints at higher-than-expected interest rates and Scotland’s decision not to break away from the United Kingdom.

The greenback slipped to 108.70 yen, from 108.99 yen in New York and a six-year high above 109 yen in Tokyo earlier Friday.

The euro firmed to $1.2863 and 139.87 yen from $1.2832 and 139.84 yen.

The pound fetched $1.6354, against $1.6289 in New York as Scotland’s “No” vote put paid to fears over the economic impact of a split from the United Kingdom.

The dollar’s upward momentum could ease for now after US Treasury yields declined last week, said a senior dealer at a major European bank in Tokyo.

“The dollar could hit a speed bump before reaching 110 yen,” he told Dow Jones Newswires.

But Credit Agricole said investors’ interest in the dollar could return sooner than later – as the Fed suggested interest rates might rise more than initially forecast when they are eventually hiked, possibly from mid-2015.

“With event risk-induced uncertainty out of the way and healthy US economic releases expected, risk appetite will likely remain supported in the days ahead,” it said in a note.

Higher risk appetite is a negative for the yen, which is seen as a safe-haven in times of turmoil or uncertainty.

Expectations of fresh monetary easing by the Bank of Japan have also hit the Japanese unit.

Currency rates hardly moved as the Group of 20 major world economies said Sunday they could overcome geopolitical tensions and financial risks, as the club aims for an ambitious goal of raising their collective GDP by two percent above current projections over the next five years.