Dollar Dominance: A Rollercoaster Year for Global Currencies

The dollar maintained its strong position as global currencies closed out a year marked by varying central bank policies. Supported by rising U.S. yields, the dollar index rose by 6.5% in 2024. The Japanese yen hit five-month lows, reflecting broader currency trends despite potential intervention to stabilize its decline.

The dollar's stability was evident on Monday as global currencies marked the end of a tumultuous year shaped by divergent central bank strategies. The dollar index saw a modest uptick, reflecting gains that positioned the greenback for a stronger end-of-year close.

With the U.S. yields rising, the dollar index observed a 6.5% increase over the year, defying predictions of future weakening. Analyst Chris Weston noted the unexpected durability of the dollar amidst President-elect Donald Trump's anticipated pro-growth and inflationary policies.

In contrast, the yen's performance highlighted concerns as it hovered around five-month lows. Despite potential Japanese intervention, the currency struggled against the dollar, influenced by the Federal Reserve's caution over future rate cuts and the BOJ's steady interest rate policies.

(With inputs from agencies.)