The Phuket News Novosti Phuket Khao Phuket

Login | Create Account | Search

Euro rises against dollar on rate hike prospect

Euro rises against dollar on rate hike prospect

The euro climbed against the dollar in Asia on Friday, supported by lingering expectation that the European Central Bank would move to raise interest rates, dealers said.

Saturday 26 February 2011, 02:20AM

The single European currency traded at $1.3826 in Tokyo morning trading, compared to 1.3797 in New York late Thursday. It rose to 113.29 yen from 112.94 yen.

The dollar fetched 81.92 yen, little changed from 81.91 yen.

The euro was pushed higher after German central bank chief Axel Weber said Thursday that interest rates "can only go one way from here".

"Rates only know one direction at the moment -- and that is north," he said.

"The hawkish comment from Weber gave an additional fuel to speculation about the ECB's rate hike," said Sumino Kamei, senior analyst at the Bank of Tokyo-Mitsubishi UFJ

The euro was also supported by speculation that some Middle Eastern and North African countries may use the currency for their oil settlement instead of the dollar as pro-US regimes are faced with growing unrest in the region, a dealer said.

"The Muslim Brotherhood, though known as relatively moderate, may take control of the government in Egypt," Satoshi Tate, senior dealer at Mizuho Corporate Bank, told Dow Jones Newswires.

Dan About Thailand

"The whole thing happening in the Middle East is weighing on the dollar," Tate said.

Investors' risk appetite improved as concerns over oil supplies eased somewhat, a senior dealer at a major Japanese bank said.

US oil prices closed down Thursday after touching a high of $103.41 a barrel, as US and other officials said current oil stockpiles are adequate to meet any supply disruptions.

"The yen fell back after broadly rising against other major currencies overnight," Kamei said.

The yen and the Swiss franc drew active purchases Thursday as risk-averse investors sought safe havens amid ongoing violence in Libya.

The Swiss franc renewed its all-time high against the dollar early in the morning but eased later. The dollar fetched 0.9251 Swiss francs in morning trade, after hitting 0.9233 earlier, compared to 0.9260 in late New York trade.

comments powered by Disqus