Euro's Rise to Six-Week High

The euro rose to a six-week high against the dollar, increasing pressure on European officials who say they are concerned the currency's appreciation will exacerbate an economic slowdown in the 15-nation region., Bloomberg 1/14/2008 7:48:02 AM

The euro has strengthened 6 percent against the currencies of the region's 24 biggest trading partners in the past five months alone and traded at $1.4909 in London today, the highest since Nov. 27. The gain reduces the competitiveness of European exports, which drove growth in the past two years and spurred hiring and investment.

The Brussels-based European Commission may cut its growth forecast for the euro region this year to 1.8 percent or 1.9 percent compared with an earlier estimate of 2.2 percent, Luxembourg Finance Minister Jean-Claude Juncker, who chairs meetings of euro-area finance ministers, said in Malta. The economy grew 2.6 percent last year.

While French demands that the yen must appreciate have had little support so far, European Union leaders have become more outspoken on the yuan. The Chinese currency rose 7.4 percent against the dollar over the past 12 months and weakened 6 percent against the euro.

The euro's gain against the dollar has been driven in part by the shrinking interest-rate gap between the U.S. and Europe. The dollar fell for a third week versus the euro, its longest losing streak since November.