Tokyo - The dollar extended its gains in Asia on Thursday after the US Federal Reserve's landmark decision to lift interest rates for the first time in nearly a decade.
The decision ended months of market uncertainty and reflected the central bank's growing confidence in the world's top economy.
“This action marks the end of an extraordinary seven-year period during which the federal funds rate was held near zero to support the recovery of the economy from the worst financial crisis and recession since the Great Depression,” Fed chief Janet Yellen told a news conference.
The bank raised its key federal funds rate to 0.25-0.50 percent, and modestly boosted its view of the economy.
Rates were slashed by the Fed as part of a drive to fend off the ravages of the global financial crisis as it tore into the US economy, scything jobs and sending world stocks into freefall.
The dollar has been rising for months on expectations of the latest move, as higher rates offered investors the prospect of better returns on dollar-denominated assets.
The greenback rose to 122.58 yen from 122.26 yen Wednesday in New York after the Fed announcement, and 121.86 yen earlier in Asia.
The euro weakened to $1.0852 from $1.0911 in New York and $1.0936 in Tokyo before the announcement.
The British pound, Swiss Franc and Australian dollar were lower against the US unit.
Emerging currencies including the Singapore dollar, South Korean won, Malaysian ringgit and Thai baht also lost ground and analysts said the dollar may still have room to rise with the pace of subsequent Fed rate hikes next year not fully priced in.
Expectations for further monetary easing measures by the European Central Bank and Japanese policymakers were also likely to weigh on the euro and yen, they said.
“The dollar will continue to gain support, particularly against commodity currencies, Asian emerging-market currencies and the euro,” said Mansoor Mohi-uddin, a senior markets strategist at Royal Bank of Scotland Group in Singapore.
AFP