HONG KONG The yen fell to its lowest level versus the dollar in 24 years on Monday, as the yield spread between Japanese and US benchmarks widened after strong US inflation data pushed Treasury yields higher.

As the policy gap between hawkish central banks overseas and the dovish Bank of Japan (BOJ) becomes increasingly obvious, the dollar surged to 135.22 yen, its highest since October 1998, having gained for each of the previous seven sessions. This week's focus will be on central banks' efforts to reduce inflation by raising interest rates. At their meetings, the Federal Reserve and the Bank of England are likely to hike rates, and the Swiss National Bank may follow suit.

The BOJ, on the other hand, has indicated it will buy 500 billion yen ($3.70 billion) of Japanese government bonds on Tuesday as part of its strategy of keeping benchmark 10-year yields within 0.25 percentage points of its 0% target. The benchmark 10-year yield in the United States, on the other hand, hit 3.2 percent early Monday, up about 12 basis points from Friday.

The two-year yield in the United States rose to 3.194 percent on Friday, the highest level since late 2007. Inflation in the United States exceeded estimates on Friday, fueling speculation that the Federal Reserve will have to hike rates even more aggressively.

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