NEW YORK – The US dollar erased more than half of this year’s gains amid waning haven demand spurred by growing bets the Federal Reserve will temper its aggressive rate hikes and China’s reopening.

The Bloomberg Dollar Spot index has pared the year’s advance to about 7 per cent after gaining as much as 16 per cent earlier as a slower-than-expected rise in consumer prices and comments by Fed chair Jerome Powell stoked speculation the US central bank will slow its pace of rate hikes next week.

The dollar gauge fell as much as 0.4 per cent in Asian trading on Monday, hitting its lowest level since June 28 as risk currencies rallied. The gauge is set to fall a fifth day, the longest losing streak since April 2021 after Shanghai and Hangzhou eased some Covid-19 restrictions in a move towards reopening the world’s second-largest economy.

The Singapore dollar gained 0.5 per cent to 1.3447 per US dollar as at 12.07pm on Monday from its previous close. For the year to date, the greenback is down 0.3 per cent against the Singdollar.

China’s renminbi, meanwhile, firmed past the closely watched 7-per-US dollar level on Monday, hitting its strongest since mid-September, as Beijing eased some of its strict Covid-19 curbs, potentially attracting fresh foreign inflows.

The Chinese currency was also bolstered by expectations of slower US interest rate hikes, though some analysts warn that China’s road to economic recovery could be bumpy and that the renminbi will remain volatile.

“Anticipation of China reopening, Fed policy calibration are key thematics that should keep risk proxies such as commodity-linked currencies supported,” said Mr Christopher Wong, a currency strategist at OCBC Bank in Singapore. “The strong non-farm payrolls report last Friday only saw a knee-jerk bounce in the US dollar.” BLOOMBERG