Dollar recovers on US rate outlook
LONDON: The dollar rebounded against the euro and yen on Friday after Federal Reserve chief Ben Bernanke said US interest rates would need to rise once the economy has improved sufficiently.
In late morning trading here, the European single currency fell to 1.4727 dollars from 1.4791 dollars late in New York on Thursday.
Against the Japanese currency, the dollar jumped to 89.22 yen from 88.39 yen on Thursday.
The euro paused in its climb against the dollar "after Bernanke (on Thursday) mentioned that the Fed will have to tighten monetary policy when the economy has improved sufficiently," said Calyon economist Sebastien Barbe.
But he added: "Our view remains that the Fed is not going to hike rates anytime soon."
The greenback has been weighed down recently by speculation that the Fed will be slower than many other central banks to raise its key interest rate.
Earlier this week, Australia became the first advanced economy to raise interest rates since the global financial crisis and promised more rises to come.
The Reserve Bank of Australia announced a hike of 25 basis points to 3.25 percent, lifting rates off a 49-year low after an aggressive round of cuts credited with helping fight off the worst global downturn in decades.
However, the European Central Bank and Bank of England both kept their key lending rates at historic low levels following meetings this week.
Despite rising against the yen on Friday, the dollar came under pressure against some Asian currencies such as the South Korean won and the Singapore dollar, prompting fresh action by central banks in the region to prop up the US currency, dealers said.
Monetary authorities in South Korea, the Philippines and Singapore were believed to have bought dollars on Friday, traders said.
Japan has not intervened in the foreign exchange market since March 2004, although Finance Minister Hirohisa Fujii has said Tokyo would consider taking action in the event of "abnormal" currency movements.
In London on Friday, the euro was changing hands at 1.4727 dollars against 1.4791 dollars late on Thursday, at 131.38 yen (130.74), 0.9224 pounds (0.9203) and 1.5182 Swiss francs (1.5178).
The dollar stood at 89.22 yen (88.39) and 1.0313 Swiss francs (1.0260).
The pound was at 1.5965 dollars (1.6068).
On the London Bullion Market, the price of gold edged up to 1,045.95 dollars an ounce from 1,045 dollars an ounce late on Thursday. Gold had reached a record-high 1,061.55 dollars an ounce on Thursday in London.