Dollar remains steady, yen declines

The dollar remained stable on Monday, maintaining its largest weekly gain since 2022, supported by expectations of sustained high US interest rates and escalating tensions in the Middle East, as reported by Reuters.

The dollar index, which measures the dollar against other major currencies, remained stable at 105.92, slightly below its recent high.

Last week, the dollar strengthened by 1.6 per cent against a basket of major currencies following unexpected inflation data and signals of a potential rate cut by European policymakers.

While, the yen experienced a significant decline on Monday, reaching a 34-year low against the dollar at 153.93.

This decline has raised speculation about potential currency intervention by Japan, with Finance Minister Shunichi Suzuki indicating readiness to act if necessary.

On Monday, currency movements appeared to be more influenced by diminishing expectations of a Federal Reserve rate cut rather than the recent conflict between Iran and Israel.

The market response to Iran’s weekend attack on Israel was relatively subdued, with analysts like Jason Wong from BNZ in Wellington suggesting that the attack was symbolic and unlikely to cause significant damage.