THE DOLLAR rose broadly yesterday after Federal Reserve chairman Ben Bernanke said the central bank would be ready to tighten monetary policy as an economic recovery takes hold.
The dollar, which took a beating for much of the week, recovered some losses against the euro and pulled away from a more than eight-month low against the yen earlier in the week.
Despite yesterday’s gains, the greenback remained lower against a basket of currencies for the week. In remarks on Thursday, Mr Bernanke said while the Fed must continue to prop up the economy for an extended period, it could not do so indefinitely for fear of an inflationary surge.
“People are anticipating that now the Fed may be more inclined to raise rates earlier than anticipated,” said Kevin Chau, currency strategist at IdeaGlobal in New York. “I think they will continue to jawbone by saying they’re vigilant, but I think they will still hold off until the second half of 2010.”
The Fed has cut interest rates to near zero per cent and pumped hundreds of billions of dollars into the financial system to help boost the economy. – (Reuters)
