Dollar Nears 7-Month Highs

The dollar hovered near its highest levels in seven and a half months against the yen after comments from the heads of the U.S. and Japanese central banks highlighted the significant differences in their monetary policy paths during a conference hosted by the European Central Bank last night. The dollar surged 11.55% since late March, reaching 144.62 yen on Wednesday for the first time since November 10, prompting verbal warnings from Japanese government officials this week that the movement might be too rapid. Federal Reserve Chairman Jerome Powell stated in one of the conference panels, alongside European Central Bank President Christine Lagarde, Bank of Japan Governor Kazuo Ueda, and Bank of England Governor Andrew Bailey, that it is likely rates will be raised two more times this year and did not rule out the possibility of a hike in July. In contrast, Ueda reiterated that "there is still a distance to go" to achieve a sustainable inflation rate of 2% accompanied by sufficient wage growth, both of which are conditions set by the Bank of Japan to consider ending its ultra-loose monetary policy. The Ministry of Finance and the Bank of Japan intervened in the currency market last fall when the dollar surpassed 145 yen. The dollar was at 144.265 yen in early Asian trading on Thursday. There was little change in the dollar index, which measures the U.S. currency's performance against six major currencies, including the yen, euro, and pound, standing at 102.94 after rising 0.46% overnight. The Swedish krona briefly hit a record low, with the euro valued at 11.829 krona after the Swedish central bank raised interest rates and increased the pace of bond sales, or quantitative tightening. The krona slightly recovered, bringing the euro to 11.77 krona. The euro stabilized at $1.09125 after dropping 0.45% on Wednesday. The pound rose 0.07% to $1.6445, recovering some of the previous session's losses of 0.88%. The Australian dollar recently increased by 0.3% to $0.66205, regaining some strength after falling 1.27% yesterday.