The dollar remained firm, particularly against the yen, on expectations the US Federal Reserve will continue raising borrowing costs in the months to come. The market is currently expecting a near 70 pct chance of another two interest rate hikes from the Federal Open Market Committee by May, and over 80 pct chance of it doing so by June. This evening's release of the minutes to the last meeting of the FOMC is expected to reinforce that viewpoint. At the last meeting on Jan 31, the FOMC raised its benchmark Fed funds rate a quarter point for the 14th straight time to 4.50 pct. In the statement accompanying the last meeting, the FOMC seemed to go out of its way to provide incoming Fed chief Ben Bernanke with as much flexibility as possible. Since then Bernanke has sounded a moderately hawkish tone, cementing expectations that US borrowing costs have further to rise. Neil Mackinnon, chief economist at ECU Group, said the dollar is firm against the yen, primarily on expectations that the rate differential between the two currencies will remain favourable. While analysts expect the Fed to hike again in the next couple of months, they doubt the Bank of Japan will be tempted to tighten policy soon. However, Mackinnnon warned of potential risks to the dollar in the coming weeks, particularly as Japan approaches its fiscal year-end, and Japanese investors indulge in their annual bout of repatriating assets. Moreover, Mackinnon said US officials are beginning to "strike a much harder line" with the Chinese on currency policy, which may act as a catalyst to a move higher in the value of the yen. "It is possible that China will be named a currency manipulator in the upcoming Treasury report (on global currency policies)," said Mackinnon. Reports yesterday suggested that US Treasury officials have sounded out investors and Wall Street traders about accusing China of deliberately keeping its currency weak to make its exports cheap. If the Treasury does label China a currency manipulator, then Mackinnon said the Chinese monetary authorities will allow the yuan to move higher.