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(New York=Yonhap Infomax) Jin Woo Choi—The US dollar extended its rally for a fifth consecutive session.
The Dollar Index (DXY), which measures the greenback against six major currencies, reclaimed the 100 mark for the first time in about three months, buoyed by a sharp decline in the British pound and heightened global risk aversion.
The pound tumbled nearly 1% against the dollar after the UK government effectively formalized tax hikes, easing fiscal concerns and driving down UK gilt yields.
According to Yonhap Infomax (screen number 6411), as of 16:00 on the 4th (US Eastern Time), the dollar-yen exchange rate stood at 153.628 yen, down 0.561 yen (0.364%) from the previous New York close of 154.189 yen.
Jane Foley, Head of FX Strategy at Rabobank, commented, "Japan's Ministry of Finance is more sensitive to currency issues than any other G7 treasury." She added, "The new Japanese government is highly proactive in its relationship with Trump, and the new prime minister has made a strong start. They are unlikely to risk that relationship with a weak currency policy."
The euro-dollar rate fell to $1.14798, down 0.00397 dollars (0.345%) from the previous session.
The Dollar Index rose 0.344 points (0.344%) to 100.215. This marks the first time since early August that the DXY has surpassed 100.
The dollar's gains accelerated in New York trading as risk-off sentiment intensified amid concerns over overvalued AI stocks.
Earlier in the Asian session, Goldman Sachs CEO David Solomon warned, "There is a possibility that equity markets could decline by 10–20% over the next 12–24 months." Morgan Stanley CEO Ted Pick, speaking at the same event, said, "A 10–15% correction in equities should be welcomed."
All three major US stock indices closed lower, with the tech-heavy Nasdaq Composite plunging more than 2%.
The Dollar Index touched an intraday high of 100.255.
Michael Brown, Chief Analyst at Pepperstone, noted, "Both the dollar and yen are strengthening. This reflects a classic safe-haven bid, with the dollar still regarded as the ultimate safe asset by market participants."
John Canavan, Senior Analyst at Oxford Economics, said, "This week's equity sell-off has triggered a swift and defensive rotation into government bonds. There is a widespread perception that equity valuations have been excessively high for some time, and investors are bracing for a correction."
The pound-dollar rate plunged to $1.30189, down 0.01203 dollars (0.916%) from the previous close.
UK Chancellor of the Exchequer Rachel Reeves emphasized in a speech, "When making decisions on taxes and spending, I will do what is necessary to protect households from high inflation and interest rates, safeguard public services from a return to austerity, and control debt to ensure a stable economy for future generations."
This signals that the upcoming budget at the end of the month will be fiscally tight, relying on tax increases rather than borrowing.
Neil Wilson, Strategist at Saxo Markets, commented, "Aggressive tax hikes will lower gilt yields, giving the Bank of England more room to pursue rate cuts. Fiscal policy will be tighter, monetary policy more accommodative, and this points to continued pound weakness."
The offshore dollar-yuan (CNH) rate rose to 7.1350 yuan, up 0.0087 yuan (0.122%) from the previous session.
jwchoi@yna.co.kr
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