By Chuck Mikolajczak
NEW YORK, March 21 (Reuters) – The dollar strengthened against a basket of currencies on Monday, after comments from U.S. Federal Reserve Chairman Jerome Powell opened the door for the central bank to take a path more aggressive monetary policy.
* The greenback had been fluctuating between slight gains and losses, weakening somewhat on comments from Atlanta Fed President Raphael Bostic, who said he sees six rate hikes this year and two in 2023 on concerns about effects of the conflict between Russia and Ukraine on the US economy.
* But the dollar gained ground after Powell said the central bank must move “quickly” to rein in too-high inflation and, if necessary, will resort to larger-than-usual interest rate hikes to do so.
* Currency markets have been volatile over the past month as the situation in Ukraine has worsened, pushing up prices of commodities such as oil and putting upward pressure on already high inflation.
* The Fed raised its key interest rate by 25 basis points last week for the first time since 2018. Traders are now focused on the likely speed and size of future rate hikes.
* The dollar index, which measures the greenback against six currency pairs, rose 0.123% and the euro fell 0.24% to $1.1022.
* Ukraine defied a Russian demand that its forces lay down their arms before dawn in Mariupol, where hundreds of thousands of civilians have been trapped in a city besieged and devastated by Russian shelling.
* The Fed’s stance contrasts with that of the Bank of Japan, which on Friday maintained its huge stimulus program and left its interest rates unchanged.
* The yen weakened 0.17% to 119.38 per dollar, after touching 119.46 yen, its lowest level since February 2016.
(Additional reporting by Sinéad Carew. Editing in Spanish by Marion Giraldo and Javier Leira)