The dollar rises to its highest level in 20 years as rival currencies decline

The US dollar rose to a two-decade high on Thursday, led by widespread weakness in major rival currencies such as the yen and the euro.

The dollar index, which measures the currency’s performance against six major currencies, rose 0.8 percent to 103.83, its highest level since December 2002. The US currency has risen by 10 percent since mid-November, with a large part of its gains in the past three months.

The dollar rose against the yen, surpassing the 130 yen level for the first time since 2002, after the Bank of Japan maintained its commitment to the very loose monetary policy, which prompted the Japanese Ministry of Finance to warn of pressure on the yen.

“The Bank of Japan has given the ‘permission’ to continue selling the yen,” said Lee Hardman, currency strategist at MUFG Bank in London.

The massive selling triggered by the Bank of Japan sent the dollar up nearly 2 percent against the yen to 131 yen, its highest level in 20 years.

Meanwhile, the euro briefly touched its lowest level in more than five years at $1.0481, taking its losses for the month to five percent, its worst drop since early 2015.

Expectations are now rising that the single currency is on its way to par with the dollar, a level not reached since 2002.

“It definitely looks like a realistic possibility,” Hardman said, pointing to another major support level at $1,034, the level the yen last hit in 2017.

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