The US dollar surged against a range of currencies overnight and remained steady in early London trading on Thursday after US Federal Reserve Chairwoman Janet Yellen suggested that interest rates in the US could rise quickly this year.

The buck rallied nearly 2 per cent against Japan’s yen late on Wednesday after Ms Yellen said that the US was close to fulfilling the central bank’s criteria for justifying a rate hike.

“It is fair to say the economy is near maximum employment and inflation is moving toward our goal,” she said, speaking in San Francisco.

Ms Yellen said that “waiting too long to begin moving [the rate higher] could risk a nasty surprise down the road - either too much inflation, financial instability, or both.”

The dollar has endured a wild ride this week, with traders and investors on edge ahead of the inauguration of President-elect Donald Trump on Friday.

It slumped to a seven-week low against the yen late Tuesday after Mr Trump said that the currency was “too strong”.

In an article in the Wall Street Journal, Mr Trump said the strength of the US dollar against China's yuan “is killing us”.

“Yellen's comments were not particularly new, but it helped participants buy back the dollar which had sunk low,” Shin Kadota, senior forex strategist at Barclays, told Reuters.

“But the dollar is making less headway from these levels with Trump's inauguration looming. The Fed is poised to hike rates successively, but monetary policy would also depend to a large degree on Trump's policy specifics.”

Mr Trump has in recent weeks developed a reputation for being able to wipe billions of market value off companies with a single – sometimes seemingly offhand – comment or tweet.

Donald Trump's most controversial quotes Show all 14 1 /14 Donald Trump's most controversial quotes Donald Trump's most controversial quotes On Isis: "Some of the candidates, they went in and didn’t know the air conditioner didn’t work and sweated like dogs, and they didn’t know the room was too big because they didn’t have anybody there. How are they going to beat ISIS?" Getty Donald Trump's most controversial quotes On immigration: "I will build a great wall — and nobody builds walls better than me, believe me —and I’ll build them very inexpensively. I will build a great, great wall on our southern border, and I will make Mexico pay for that wall. Mark my words." Reuters Donald Trump's most controversial quotes On Free Trade: "Free trade is terrible. Free trade can be wonderful if you have smart people. But we have stupid people." PAUL J. RICHARDS | AFP | Getty Images Donald Trump's most controversial quotes On Mexicans: "When Mexico sends its people, they’re not sending their best. They’re sending people that have lots of problems. They’re bringing drugs. They’re bringing crime. They’re rapists." Getty Donald Trump's most controversial quotes On China: "I just sold an apartment for $15 million to somebody from China. Am I supposed to dislike them?... I love China. The biggest bank in the world is from China. You know where their United States headquarters is located? In this building, in Trump Tower." Getty Images Donald Trump's most controversial quotes On work: "If you're interested in 'balancing' work and pleasure, stop trying to balance them. Instead make your work more pleasurable." AP Donald Trump's most controversial quotes On success: "What separates the winners from the losers is how a person reacts to each new twist of fate." Donald Trump's most controversial quotes On life: "Everything in life is luck." AFP Donald Trump's most controversial quotes On ambition: "You have to think anyway, so why not think big?" Getty Images Donald Trump's most controversial quotes On his opponents: "Bush is totally in favour of Common Core. I don't see how he can possibly get the nomination. He's weak on immigration. He's in favour of Common Core. How the hell can you vote for this guy? You just can't do it." Reuters Donald Trump's most controversial quotes On Obamacare: "You have to be hit by a tractor, literally, a tractor, to use it, because the deductibles are so high. It's virtually useless. And remember the $5 billion web site?... I have so many web sites, I have them all over the place. I hire people, they do a web site. It costs me $3." Getty Images Donald Trump's most controversial quotes On Barack Obama: "Obama is going to be out playing golf. He might be on one of my courses. I would invite him. I have the best courses in the world. I have one right next to the White House." PA Donald Trump's most controversial quotes On himself: "Love him or hate him, Trump is a man who is certain about what he wants and sets out to get it, no holds barred. Women find his power almost as much of a turn-on as his money." Getty Images Donald Trump's most controversial quotes On America: "The American Dream is dead. But if I get elected president I will bring it back bigger and better and stronger than ever before and we will make America great again." GETTY

Last week, German carmaker stocks sold off sharply after Mr Trump in a newspaper interview warned he would impose a border tax of 35 per cent on vehicles imported from abroad to the US market.

Earlier this month, close to $25bn was shaved off the value of the S&P 500’s top nine pharmaceutical companies in a matter of minutes after the President-elect accused them of “getting away with murder”.