The dollar advanced to its highest level in 14 months on speculation interest rates may be increased sooner than the financial markets expect, and after investors scampered for havens ahead of Scotland’s vote for independence from the U.K. this month.
The greenback rose 0.4 percent to trade at $1.2897 per euro as of 4:31 pm in New York. It had earlier advanced to $1.2882, its highest level since July 10, 2013. The yen fell up to 1 percent to 106.09 per dollar, its lowest level since Oct. 2008, before steadying at 106.03. The Japan’s currency declined 0.5 percent to 136.73 per euro on signs that Asia’s second-largest economy is slowing down.
“The Fed papers that came out today suggest the market perhaps has lower expectations of the pace of rate increases.” Jennifer Vail, a Minneapolis-based head of fixed income at U.S. Bank Wealth Management told Bloomberg News. “The dollar is getting strength as probability increases on Scotland independence. The U.K. may run into some economic uncertainties.”
The South African rand declined 1.1 percent on Monday to 10.8109 per dollar and touched a four-week low of 10.8130 ahead of the release of a report on Tuesday that is expected to show that the nation recorded a bigger current-account deficit in the April-June quarter of this year.
The pound retreated after YouGov Plc’s survey revealed the Scottish independence push appeared set for a victory for the first time in 2014 ahead of the next week’s referendum. The U.K. currency dropped 1.4 percent to $1.6107 and touched $1.6099, its lowest level since Nov. 21. This was its biggest drop since July 2013. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
To contact the reporter of this story; Yashu Gola at email@example.com