The US dollar rose to its highest level in 19 months on Thursday against major currencies, supported by growing expectations that the Federal Reserve will raise interest rates. The greenback gained ground as traders increased their bets on tighter monetary policy in the United States.
According to market data, the US Dollar Index, which measures the performance of the American currency against a basket of other currencies, rose 0.15% to 103.02 points. This marks the highest level since April 2025. Earlier in the day, the dollar had recorded its highest level in more than two months before slightly reducing its gains to reach 102.9 points at the time of writing.
Against the Japanese yen, the dollar appreciated by 0.04%, trading at 159.83 yen. The pair approached the psychologically significant 160 level following comments from a Bank of Japan official who leaned towards monetary easing. The wide interest rate differential between the two nations continued to support the dollar, with increasing trader expectations that the Federal Reserve will tighten monetary policy.
Taiichiro Asada, a member of the Bank of Japan’s Policy Board, opposed calls for raising interest rates in the near future. In a speech, he stated that taking such a step prematurely could harm economic growth and lead to a decline in core inflation. Asada is one of two officials who voted for monetary easing and dissented from the September decision to raise borrowing costs to 1.25%. His comments contributed to the yen’s weakness against the dollar.
Despite Asada’s stance, many analysts in a Reuters poll expected the Bank of Japan to raise interest rates next month. This view was reinforced on Thursday by data showing that Japan’s annual wholesale price inflation accelerated again to 7.1% from the beginning of the year through October, up from an annual increase of 6.8% in September.
Major brokerage firms, including Goldman Sachs, now expect another rate hike in early next year, in addition to a anticipated increase in December. These projections have bolstered the dollar’s strength globally, as investors adjust their portfolios in response to diverging monetary policies between the United States and other major economies.
