Dollar reaches 14 year high

Daily Mail
Janet Yellen

The dollar reached a 14-year high on Thursday morning and stock markets soared after the Federal Reserve's announcement it would raise interest rates in 2017.  The greenback hit 103.22 at around 8am, its highest since April 2003, after jumping to 102.90 on Wednesday as investors anticipated the Fed's announcement. All three of the major indexes, the Dow Jones, Nasdaq and the S&P 500, opened up in yet another encouraging show of economic growth since Donald Trump's election win. 

On Wednesday, Federal Reserve Chair Janet Yellen spoke optimistically of its decision to raise interest rates. 'My colleagues and I are recognizing the considerable progress the economy has made toward our dual objectives of maximum employment and price stability.  'Over the past year, two and a quarter million net new jobs have been created, unemployment has fallen further and inflation has moved closer to our longer run goal of two percent.  'We expect the economy will continue to perform well,' she said.  

Against the yen, the dollar jumped as much as 0.7 percent on the day to hit 117.87, its strongest since February. Analysts said Japan might now step up verbal warnings against excessive yen declines versus the dollar. 

The dollar is on track for easily its strongest quarter against the Japanese currency in over 20 years, after a more than 16 percent climb since the start of October.

Despite the steadying signs of growth, experts cast doubt on the Fed's plans to introduce as many as three raises in 2017. 'I doubt that Fed can actually raise interest rates three times next year.  'Last year they planned to have four rate hikes, but ended up raising only once,' said Daisuke Karakama, chief market economist at Mizuho Bank in Tokyo. The allure of higher U.S. yields took a toll on emerging Asian currencies, with the Chinese yuan hitting its lowest levels in more than eight years.

The euro hit a 21-month low of $1.0468, close to its 2015 low of $1.0457 - the weakest since 2003.

The Norwegian crown surged 0.6 percent to 8.9715 crowns per euro after the country's central bank marginally raised its prediction for borrowing costs in 2019.

© Photo :Janet Yellen
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