Dollar May Have Biggest Annual Gain Against the Yen Since 1979
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The dollar, buoyed by speculation the Federal Reserve will keep raising interest rates, is on the verge of having its biggest annual gain against the yen since 1979.
Fifty-eight percent of the 52 traders, strategists, and investors surveyed on December 2 from Sydney to New York recommended buying the dollar against the yen. A majority also said investors should purchase the American currency versus the euro.
The dollar advanced 18% this year against the yen and 16% versus the euro as the Fed lifted its interest-rate target seven times to 4% and showed no sign of stopping. Bank of Japan Deputy Governor Toshiro Muto said last week borrowing costs won’t rise. European Central Bank President Jean-Claude Trichet said he doesn’t plan a series of rate increases after boosting the ECB’s benchmark for the first time five years.
“The tide of dollar strength isn’t going to turn for quite some time,” said Momtchil Pojarliev, a currency manager in Geneva at Pictet & Cie. “The Japanese and Europeans are very unlikely to do enough to cut the dollar’s interest-rate advantage.”
