Euro Rises to Record Against Dollar


The euro rose to a record against the dollar on speculation the European Central Bank will signal today that it isn't prepared to cut interest rates anytime soon.

The euro stayed higher versus the U.S. currency after policy makers left the main refinancing rate at 4 percent today, as forecast by all 68 economists surveyed by Bloomberg News. ECB President Jean-Claude Trichet will brief reporters on the decision at 2:30 p.m. in Frankfurt. The 15-nation European currency also climbed to an all-time high versus the pound.

The euro climbed to $1.5913, the highest since the currency's 1999 debut, and traded at $1.5883 as of 1:22 p.m. in London, from $1.5831 yesterday in New York. The region's common currency has risen 8.9 percent against the dollar this year. It was at 159.20 yen, from 161.13 yesterday. The yen rose to 100.27 per dollar, from 101.80 yesterday.

The euro advanced against the pound after the Bank of England cut its main interest rate a quarter-percentage point to 5 percent, as forecast by 52 of 61 economists in a separate Bloomberg survey. The pound has dropped 8.3 percent against the euro this year as investors reined in growth estimates for the U.K. economy.

The ECB has avoided rate cuts even as concern deepened that the fallout from the U.S. subprime-mortgage crisis will spread to Europe. Consumer prices in the 15 countries that share the euro rose 3.5 percent in March from a year earlier, the fastest pace in almost 16 years.

The euro's trade-weighted index rose to an all-time high of 143.55 yesterday as speculation the currency's yield advantage will widen against the dollar prompts central banks to cut holdings of U.S. currency-denominated assets, said Neil Jones, head of hedge fund sales at Mizuho Capital Markets in London.


TradingEconomics.com, Bloomberg
4/10/2008 6:51:36 AM