Sharjah24 - Reuters: The dollar surged on Tuesday to a 20-year high against the Japanese yen, underpinned by the divergence in monetary policy between a Federal Reserve determined to keep a lid on soaring inflation and a Bank of Japan that has kept interest rates ultra-low.

The greenback hit 128.97 yen, the highest since May 2002. It was last up 1.5% at 128.94 yen. The dollar has risen 5.9% on the yen so far this month, on pace for the largest monthly percentage rise since 2016.

"The BOJ has done the opposite of normalization. They have dug their heels in," said Richard Benson, co-chief investment officer at Millennium Global Investments in London.

Benson believes Japanese monetary authorities could actually intervene to strengthen the yen, but it is not about a particular level.

"I wouldn't be surprised if the BOJ intervenes because they have a lot of dollars and they can just sell them easily," Benson said. "There are obvious numbers to talk about and levels, but the narrative is very much about speed as opposed to level. So slow and gradual is fine."