Strong Dollar Weighs on All Currencies

20 Dec 2024 , 09:25 AM

The yen fought to keep afloat as it once again dropped to a new low, while the dollar seemed poised to close off the week on a high note Friday, nearing a two-year high supported by a hawkish forecast for U.S. interest rates.

Following significant movements in the previous session, which were triggered by a broad surge in the greenback, currencies took a break. The South Korean won fell to a 15-year low, the Canadian dollar plummeted to its lowest level in almost four years, and the Australian and New Zealand dollars reached two-year lows as a result, pushing their peers to historic lows.

Additionally, central banks from Indonesia to Brazil rushed to protect their currencies on Thursday.

Although Friday’s early Asian session saw more muted movements, the yen nevertheless fell to a five-month low of 157.93 per dollar as the Bank of Japan’s (BOJ) hesitancy to hike interest rates continued to exert pressure on it.

Just one day after the Federal Reserve hinted at fewer rate cuts in the United States next year, the BOJ held interest rates steady on Thursday and its governor remained evasive about when it could raise borrowing costs.

Although some investors had anticipated that the Fed’s hawkish stance would provide the BOJ some wiggle room to raise rates, or at the at least, suggest an impending move in January, the central bank ultimately provided few hints.

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