©Reuters. FILE PHOTO. US dollar bills. Image taken on February 14, 2022. REUTERS/Dado Ruvic/Illustration
By Karen Brettell
NEW YORK, April 29 (Reuters) – The dollar fell on Friday from 20-year highs against a basket of currencies, but had its best month in seven years as worries about the global economy and the stance of the Federal Reserve, which is very aggressive, reinforced the demand for the greenback.
* The dollar had hit a 20-year high against the yen as the Japanese currency took a hit from the Bank of Japan’s expansionary monetary policy. It also hit a five-year high against the euro, which has fallen sharply since the Russian invasion of Ukraine.
* The greenback gave back some of those gains on Friday as investors took profits, but still finished the month strong.
* “We have seen some strength from the dollar across the board,” said Vassili Serebriakov, currency strategist at UBS (SIX:) in New York.
* “There is a general story, which has more to do with concerns about the global cycle and helping the dollar through risk aversion, but then there are some idiosyncratic stories like dollar/yen.”
* Concerns about global growth have increased as China enacts lockdowns in a bid to stem the spread of COVID-19.
* The Chinese capital Beijing closed more businesses and residential complexes on Friday, and authorities stepped up contact tracing to contain a COVID-19 outbreak, as unrest grew over Shanghai’s month-long lockdown.
* The front against a basket of currencies stood at 102.94, after hitting 103.93 on Thursday, which was the highest since December 2002. It is up 4.76% for the month, the biggest rise since January 2015.
* The yen settled at 129.32 per dollar, after reaching 131.24 on Thursday, the weakest since April 2002. The dollar gained 6.41% against the Japanese currency in April, the best month since November 2016.
* The Bank of Japan on Thursday reinforced its commitment to keep interest rates ultra-low by pledging to buy unlimited amounts of bonds daily to defend its yield target, prompting the yen to sell off again.
* The euro was at $1.0569, after falling to $1.0470 on Thursday, the lowest since January 2017. The single currency has fallen 4.51% this month, the biggest drop since January 2015.
* Fed funds futures traders expect the fed funds rate to rise to 2.83% by the end of the year from 0.33% today.
(Reporting by Elizabeth Howcroft; Editing in Spanish by Javier López de Lérida)