Dollar rises in Asia on Fed chief rate comments

TOKYO: The dollar rose in Asia on Wednesday as the Fed chief said the central bank would keep its near-zero rate policy in place, but hinted that interest rates could rise earlier than expected.

In Tokyo morning trade, the dollar bought 101.73, up a tad from 101.67 yen in New York and 101.59 yen in Tokyo earlier Tuesday.

The euro bought $1.3564 and 138.00 yen, little changed from $1.3570 and 137.97 yen in US trade.

Federal Reserve Chair Janet Yellen on Tuesday told Congress that the Fed would hold its near-zero interest rate policy in place until the US economy strengthens, as she began two days of semi-annual testimony.

“Although the economy continues to improve, the recovery is not yet complete,” Yellen told the Senate Banking Committee.

The unemployment rate has fallen nearly 1.5 percentage points over the past year, and stood at 6.1 percent in June, while job growth over the first half of the year was a “somewhat stronger pace” than in 2013, she said.

Yellen suggested the Fed could raise its key interest rate sooner than expected if the job market continues to make solid improvement, a move that would tend to boost dollar buying.

Markets expect the first Fed rate hike to come in the middle of next year, and Yellen said it would be “sometime in 2015”.

“If the labour market continues to improve more quickly than anticipated… then increases in the federal funds rate target likely would occur sooner and be more rapid than currently envisioned,” Yellen said.