Published: Wed, November 23, 2016
Economy | By Melissa Porter

Asian shares mixed, Nikkei up as Yellen remarks lift dollar

The rupee took a sharp plunge of 32 paise to crash below the 68-mark against the U.S. dollar in early trade today on higher dollar demand from importers after the American currency strengthened overseas coupled with lower opening in the domestic stock market.

Dollar index highest since 2003 on December rate hike view * Dollar index on track for biggest 2-week rise in 20 months * Greenback heads for 7 percent two-week gain vs yen * Chinese yuan hits eight-year low (Updates market action, changes dateline, previous LONDON) By Richard Leong NEW YORK, Nov 18 (Reuters) - The dollar rose to its highest level since April 2003 against a basket of currencies on Friday and was on track for its largest two-week increase since March 2015, as traders piled bets on a massive dose of fiscal stimulus under a Trump U.S. presidency.

The yen continued to weaken in the wake of the Bank of Japan's offer on Thursday to buy unlimited bonds. The yield on the 10-year Treasury note rose to 2.33 percent from 2.30 percent.

Yellen's comments to a joint congressional committee sent the dollar climbing against the yen and euro, and encouraged analysts expecting a rate increase. Brent crude, which is used to price global oils, added 85 cents, or 1.8 percent, to $47.48 a barrel in London.

"The BOJ is taking steps to build up its credibility".

Japanese Finance Minister Taro Aso said that while nervous moves were seen in the forex market, the underlying moves were stabilising.

"Despite no concrete economic proposals on the table from Trump's team. the market is fully subscribing to a return of Reagan-esque fiscal (spending), along with a steeper path of interest rate normalisation", Stephen Innes, senior trader at OANDA, said. Housing starts marked a nine-year peak last month, weekly jobless claims fell to a 43-year low and consumer prices posted their biggest increase in six months.

US shares were poised to open lower. Yields have been on an uptrend since last week's US election, amid speculation that the administration of President-elect Donald Trump will embark on inflationary policies.

The election of Donald Trump as USA president has done nothing to change the Fed´s plans for a rate increase "relatively soon", the Fed´s Yellen said on Thursday in Congressional testimony.

She also pledged to serve out her term as Fed chair through 2018.

"It's the same theme, which is continued backing up of USA yields as the market reprices the prospects of Federal Reserve rate hikes", said Sue Trinh, head of Asia FX strategy at Royal Bank of Canada in Hong Kong. "The yield on the US 10-year Treasury is now around the same level it was this time last year when the Fed was preparing its first hike in nearly a decade and about to forecast four more this year, which didn't exactly go to plan".

"That dynamic is helping to lift the USA dollar right across the board", she said. The euro rose to $1.0699 from $1.0681.

The euro fell 0.2 percent on the day to $1.0602 after falling as low as $1.0582, its lowest since December 3.

Hindalco (down 2.26 percent) was the top loser in the early morning trade followed by Bharti Infratel, Grasim, Tata Motors and Dr Reddy's Labs.

At 10.24 pm, while BSE Sensex was down 0.17 percent at 26,180.78, 50-share index Nifty was trading at 8,066.65, down 0.16 percent. Natural gas climbed 14 cents, or 5.2 percent, to $2.84 per 1,000 cubic feet.

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