Dollar soars to 124.25 yen, highest in more than 12 years

Tokyo

The dollar soared to its highest level against the yen in more than 12 years on Thursday, powered by expectations for a US interest rate hike and more monetary easing from Japan's central bank.

The greenback briefly touched 124.25 yen in Tokyo, its highest level since late 2002, before settling back to 124.14 yen. That compares with 123.63 yen in New York late Wednesday.

Investors have been in an upbeat mood as equities surge, with the Nasdaq hitting a new record on Wednesday and Tokyo's benchmark Nikkei 225 index marching toward its longest consecutive-day rally since 1988.

The dollar has resumed its bull run against the yen on growing expectations that the Federal Reserve will hike interest rates by the end of the year while the Bank of Japan is tipped to launch more stimulus to kickstart a sluggish economy.

The chances of a rate hike -- which tends to boost demand for dollar-denominated assets -- have increased following positive US data this week and comments from Fed chief Janet Yellen Friday that rates would go up "at some point this year".

"The market is getting an inkling that the data in the US will start to get stronger,” Claudio Piron, a Singapore- based strategist at Bank of America Corp., told Bloomberg News.

“The trend will be your friend in terms of a higher dollar.”