The U.S. dollar strengthened against a basket of major currencies on Friday, with the greenback surging against the Japanese yen after the Bank of Japan raised interest rates to 1.25%, their highest level in 31 years, paving the way for further dollar gains.
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The dollar rose 1.2% against the yen to a two-week high of 157.897 yen. It was on track for its largest daily gain against the Japanese currency since December and its biggest weekly advance since September 2024, according to CNBC.
The dollar index, which tracks the U.S. currency against six major currencies, gained 1.4% over the week to reach its highest level in six weeks. The move came after the U.S. Federal Reserve raised interest rates on Wednesday and indicated that further increases could be possible.
The euro fell 0.1% to $1.14595, putting it on course to end the week down around 1% following the Federal Reserve’s rate hike.
The British pound also declined 0.1% to $1.335, giving up earlier gains after retail sales data came in stronger than expected. The Bank of England left interest rates unchanged on Thursday but also indicated that borrowing costs could rise.
Separately, the Chinese yuan climbed to its strongest level against the dollar in more than four years, extending a rally supported by Chinese exports and the central bank.
The offshore yuan rose as much as 0.1% to 6.6967 per dollar on Friday, its strongest level since June 2022. The move followed the People’s Bank of China strengthening the yuan’s daily reference rate for an eighth consecutive session, the longest such streak since 2023.
