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Dollar Gauge 0.1% From Five-Year High After Fed as Won Slides

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A gauge of the dollar was 0.1 percent from a five-year high amid speculation the Federal Reserve will raise interest rates next year after removing a pledge to keep them low for a “considerable time.”

The U.S. currency matched the strongest in a week against the euro after strengthening yesterday when Fed Chair Janet Yellen said rates would probably be increased gradually once economic parameters were met. South Korea’s won slid against all its major counterparts after the yen weakened yesterday. Australia’s dollar rallied from a four-year low as a gain in Asian stocks spurred demand for higher-yielding assets. A gauge of currency volatility climbed to the highest in 15 months.

“The Fed statement signals policy makers are shifting to a more hawkish stance, while also expressing caution about the economy,” said Junichi Ishikawa, an analyst at IG Markets in Tokyo. The dollar “is benefiting from an ideal mix of stock gains and a gradual rise in U.S. yields.”

The Bloomberg Dollar Spot Index was little changed at 1,120.85 at 2:26 p.m. in Tokyo after gaining 0.9 percent yesterday. The gauge, which tracks the currency against 10 major peers, closed at 1,122.34 on Dec. 5, the highest level since March 2009.

The dollar dropped 0.2 percent to 118.39 yen after surging 1.9 percent yesterday, the biggest advance since Oct. 31. The U.S. currency was unchanged at $1.2342 per euro after appreciating to $1.2321, matching the strongest since Dec. 9. The yen gained 0.2 percent to 146.13 per euro.

Updated At 11:25 Am 18/DEC/Delhi/India


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