LONDON, Dec 7: The dollar registered a modest gain against the euro here on Wednesday while the yen stayed close to a 32-month low — 121.39 — against the US currency.

The single European currency was at 1.1722 dollars in late-day trade after 1.1783 late Tuesday in New York.

The dollar, meanwhile, was trading at 120.97 yen against 120.82. Analysts said the yen has been hurt by the differential in US and Japanese interest rates, notably as the Japanese central bank has kept its rates at near zero.

The dollar has had the benefit of strong economic data and rising interest rates, with markets fully pricing in a quarter-point rate hike on Dec 13 when the US Federal Reserve next decides on borrowing costs.

“The Fed is all but certain to raise rates by 25 basis points next week. The real interest, as is now usual, will be in the accompanying statement,” Paul Ashworth at Capital said.

Indeed, speculation that the expected US rate hike may be accompanied by a change to a less hawkish statement appeared to limit the dollar’s gains.

“Dropping the pledge to keep raising rates at a ‘measured pace’ would give the incoming Fed chairman a free hand when he takes over in February,” added Ashworth.

Economist Ben Bernanke is to replace long-time Fed chairman Alan Greenspan.

In Europe, doubts that the European Central Bank will deliver further interest rate hikes weighed on the euro.

The euro was changing hands at 1.1722 dollars against 1.1783 late on Tuesday in New York, 141.77 yen (142.39), 0.6757 pounds (0.6764) and 1.5392 Swiss francs (1.5397).

The dollar stood at 120.97 yen (120.82) and 1.3134 Swiss francs (1.3064).

The pound was being traded at 1.7348 dollars (1.7415).

—AFP