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US dollar rises in Asia after Yellen comments

TOKYO--The dollar rose in Asia on Wednesday as the head of the U.S. Federal Reserve indicated that interest rates could rise earlier than expected if the world's biggest economy continues to pick up pace.

In Tokyo afternoon trade, the dollar bought 101.73, up a tad from 101.67 yen late in New York and 101.50 yen in Tokyo earlier Tuesday.

The euro bought US$1.3561 and 137.97 yen, little changed from US$1.3570 and 137.97 yen in U.S. trade.

Fed chief Yellen told lawmakers in Capitol Hill Tuesday that the bank would keep its ultra-low rates in place but could implement increases “sooner and be more rapid than currently envisioned” if the jobs market strengthens further.

The latest data from the Labor Department showed the world's number one economy added far more jobs than expected in June, while the unemployment rate dipped.

But she added that the direction of rates “likely would be more accommodative than currently anticipated” if economic performance is disappointing.

Markets expect the first rate hike to come in the middle of next year, and Yellen said it would be “sometime in 2015.”

Capital Economics said in a note that “the Fed appears to be in no rush to begin normalizing interest rates, even though the pace of jobs growth has accelerated and the unemployment rate has fallen to 6.1 percent.”

But it added that it expected hikes to start by March.

The dollar was mostly higher against other Asia-Pacific currencies.

It firmed to SG$1.2436 from SG$1.2431 on Tuesday, to 60.21 Indian rupees from 60.17 rupees, and to 1,032.70 South Korean won from 1,026.26 won.

It also rose to 43.61 Philippine pesos from 43.59 pesos, while it was flat at 11,758.80 Indonesian rupiah and it slipped to 32.17 Thai baht from 32.18 baht.

The Australian dollar edged down to 93.38 U.S. cents from 93.90 cents, while the Chinese yuan fetched 16.38 yen against 16.33 yen.

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