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U.S. dollar tumbles as Japan signals rate increase

U.S. dollar tumbles as Japan signals rate increase

The U.S. dollar slid yesterday against the yen as hawkish remarks from a Bank of Japan policymaker renewed the possibility of a rate hike, ending a weeklong rout of the Japanese currency, dealers said.
Miyako Suda, one of nine members of the Bank of Japan Policy Board, said the central bank "should consider a policy change without hesitation" if the bank is sure of its statements that the economy is recovering.
"If the timing of the rate hike comes too late, it may trigger major economic swings and price instability," she said in a speech in Saga prefecture in southern Japan.
The U.S. dollar was sharply down at 120.45 yen in Tokyo afternoon trade yesterday, from 121.13 in New York late Wednesday. The euro fell to 156.11 yen from 157.19.
The euro inched down to US$1.2962 here from US$1.2965 dollars in New York.
"The market reacted to Ms. Suda's words of 'policy change without hesitation'," said Hiroshi Sakurai, analyst at Mizuho Investors Securities.
"Some traders are now betting the BOJ would raise rates next month after the expected announcement of strong GDP growth figures for the quarter to December," he said.
Meanwhile, the recent resurgence of the British pound proved short-lived following the release of minutes from the Bank of England's last policy meeting.
The Bank of England's surprise interest rate rise to 5.25 percent earlier this month was decided by a surprisingly tight margin of 5-4, the minutes revealed.
The pound declined to US$1.9670 from US$1.9687 in New York. The British currency had spiked as high as US$1.9900 Tuesday, its highest level against the U.S. dollar since 1992.
The dollar fell to NT$32.80 from NT$32.93.