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Business

December 2, 2016

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Dollar climbs

Dollar climbs

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TOKYO: The dollar touched a 9-1/2-month high against the yen on Thursday, as oil prices surged after OPEC agreed to output cuts - lifting inflation expectations and U.S. bond yields.

Steven Mnuchin, President-elect Donald Trump´s pick to lead the U.S. Treasury, gave no hint of any unease over the strong dollar in his first remarks since being named for the job, giving traders fresh impetus to buy the U.S. currency.

The dollar´s index against a basket of six major currencies last stood at 101.42. On Wednesday, it had risen as high as 101.83, nearing a 13-1/2-year peak of 102.05 set last week.

The dollar´s rebound came as oil prices jumped around 9 percent on Wednesday as OPEC members agreed to cut production, its first reduction since 2008.The gains in oil prices stoked inflation expectations, which in turn sent U.S. Treasury yields higher given the negative impact of inflation on bond prices.

The higher Treasury yields fuelled demand for the dollar relative to currencies such as the euro and yen, whose government bond yields are still low-to-negative.

The dollar rose notably against the yen, hitting a peak of 114.83 yen earlier on Thursday, its strongest level since mid-February.

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