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Dollar hits five-year high vs yen, euro sags amid Ukraine uncertainty

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© Reuters. FILE PHOTO: A Euro banknote is displayed on U.S. Dollar banknotes in this illustration taken, February 14, 2022. REUTERS/Dado Ruvic/Illustration
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By John McCrank and Joice Alves

New York (Reuters) -The dollar edged higher on Friday while other safe-haven and commodity-linked currencies declined, after Russian President Vladimir Putin said there had been some progress in talks between Moscow and Ukraine.

Putin said in a meeting with his Belarusian counterpart Alexander Lukashenko that there had been “certain positive shifts” in negotiations with Ukraine and that talks continued practically on a daily basis.

Russia’s Feb. 24 invasion of Ukraine, which Moscow calls a “special operation,” has roiled markets, causing commodity prices to spike and threatening global economic growth prospects.

“If perhaps there is optimism and positivity towards talks and there is any chance that there is a ceasefire or peace, that of course would get global growth momentum going again,” said Juan Perez, head of trading at Tempus Inc.

The dollar, which is seen as a safe-haven currency, initially declined on the news, but then gradually strengthened and was last up 0.399% against a basket of six global peers at 98.753.

The greenback was near a five-year high against the safe-haven Japanese yen, which was down 0.7% at 116.935 yen. The dollar has also been supported by expectations the Federal Reserve will start raising interest rates at the end of its March 15-16 policy meeting, with inflation running hot.

While the U.S. central bank is all but certain to hike rates from the COVID-19 pandemic low, the Bank of Japan, which also holds a policy meeting next week, is set to remain an outlier.

The euro declined 0.29% to $1.0956 but was heading on Friday to its first weekly gain in five weeks. The single currency has fallen almost 2% against the U.S. dollar in March.

After hitting its lowest level in almost two years on Monday amid rising stagflation worries arising from the Ukraine war, the euro found some support from the European Central Bank’s announcement that it will phase out its stimulus, opening the door to an interest rate hike before the end of 2022.

Commodity-linked currencies, including the Australian dollar, the New Zealand dollar, and the Norwegian crown, were lower versus the greenback, with the Aussie down 0.48%, the kiwi down 0.38% and the crown down 0.29%.

Bitcoin slid 1.13% to $39,000. It had surged this week after U.S. President Joe Biden signed an executive order on Wednesday requiring the government to assess the risks and benefits of creating a central bank digital dollar.

Dollar edges up after Putin’s comment about progress in Ukraine talks

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