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Dollar solid around ¥122.50 on Fed rate hike

JIJI

The dollar stayed solid around ¥122.50 in Tokyo trading on Thursday, powered by the U.S. Federal Reserve’s hiking of interest rates.

At 5 p.m., the dollar was at ¥122.42-42, up from ¥121.92-92 at the same time Wednesday. The euro was at $1.0855-0855, down from $1.0939-0940, and at ¥132.90-90, down from ¥133.38-40.

The dollar drew demand after the Fed’s rate increase drove U.S. stock prices and long-term interest rates higher.

Market players were relieved to see Fed Chair Janet Yellen suggest that the pace of future rate increases would be slow, an analyst at a bank-affiliated brokerage house said.

A rise in Japanese stock prices also gave a lift to the dollar, sending the currency above ¥122.60 around noon.

The dollar later grew top-heavy, pressured by position-adjustment selling.

There were moves to test the dollar’s upside but traders were reluctant to build up positions, an official at a foreign exchange brokerage firm said.

“The dollar is likely to face short-covering ahead of Christmas holidays,” the official said.

The greenback’s topside is expected to be capped at levels around ¥122.50 for the time being, an official at a Japanese bank said.