NEW YORK: The dollar hit 20-year highs around 131.50 yen in New York trading Monday morning, backed by speculation for a wider interest rate gap between Japan and the United States.

The US currency was quoted at 131.40-50 yen at 10:38 a.m., up from 130.77-87 yen at 5 p.m. Friday. The euro stood at 1.0690-0700 dollars, down from 1.0715-0725 dollars, and at 140.50-60 yen, up from 140.13-23 yen.

Stronger-than-expected US nonfarm payroll data for May, announced Friday, reinforced a view among market players that the US Federal Reserve will maintain its hawkish stance, traders said.

The Fed’s stance marks contrast to the position of the Bank of Japan, which is unlikely to tighten its monetary policy anytime soon.

With the gap between Japanese and US interest rates seen widening, the benchmark 10-year US Treasury bond yield reached 3 pct, sparking off a fresh round of yen selling for dollars, the traders said.

JIJI Press