TOKYO: The dollar soared against emerging market currencies on Thursday as investors sought safety after minutes showed the Federal Reserve was more likely to raise interest rates than previously believed.
Traders moved back into the US currency after the minutes to the Fed's April meeting suggested on Wednesday that a US interest rate hike in June was increasingly likely.
The move saw most higher yielding, or riskier, emerging units take a belting against the dollar, with the Indonesian rupiah off more than one percent and the oil-reliant Malaysian ringgit tumbling 0.9 percent.
The South Korean won, the Philippine peso, Thailand's baht and the Taiwan dollar also declined against the US unit.
The minutes followed comments by the Fed earlier this year that said it would not raise rates again -- after December's first hike in almost a decade -- unless the world's top economy was showing signs of being in good health.
"Investors should avoid any additional investments in emerging markets because their currencies and stocks will be under huge pressure from the strong dollar," Komsorn Prakobphol, a senior investment strategist at Tisco Financial Group in Bangkok, told Bloomberg News.
While the Fed's minutes had sent the dollar surging about one percent against the yen -- considered a safe investment in times of turmoil -- on Wednesday in New York, the US unit on Thursday gave up some of its gains on the back of the uncertain outlook hanging over emerging markets.
In Tokyo on Thursday, the dollar ticked lower to 110.14 yen from 110.20 yen Wednesday in New York.
The euro edged down to $1.1213 and 123.59 yen from $1.1218 and 123.62 yen in US trade.
Markets are now eyeing a meeting between finance ministers and central bankers from the Group of Seven countries starting Friday in northern Japan for fresh trading cues.
US President Barack Obama and other G7 leaders are attending a summit in Japan next week.
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