Dollar passes ¥139, rewriting 24-year high

A man holding an umbrella is silhouetted as he walks in front of an electric monitor displaying the yen exchange rate against the U.S. dollar in Tokyo on Thursday.

TOKYO (Jiji Press) — The dollar shot up above ¥139 for the first time since September 1998 in Tokyo trading Thursday, in anticipation of an aggressive interest rate hike by the U.S. Federal Reserve.

At 5 p.m., the dollar stood at ¥139.10-11, up from ¥137.04-04 at the same time Wednesday. The euro was at $1.0035-0036, up from $1.0033-0033, and at ¥139.61-62, up from ¥137.50-51.

Following the release Wednesday of the U.S. consumer price index for June, which showed its biggest year-on-year rise in over 40 years, speculation grew that the Fed will carry out a full-percentage-point rate hike at the July 26-27 Federal Open Market Committee meeting.

Before the CPI release, a 75-basis-point increase was widely anticipated.

Expecting such a stronger tightening to further widen the Japan-U.S. interest rate gap, players stepped up dollar buying vis-a-vis the yen.

Also supported by a rise in the Nikkei stock average, the U.S. currency gradually extended gains after moving in ¥137.60 terrain early in the morning and topped ¥139.00 in late afternoon trading.

Although fears of aggressive rate hikes sending the U.S. economy into a recession still persist, investors are jumping on the dollar-buying bandwagon, a Japanese bank official said.

An official at a foreign exchange margin trading service firm suggested the possibility of Fed Gov. Christopher Waller’s upcoming speech accelerating the dollar’s appreciation against the yen.