Euro Hits New High Against Yen, Up on Dollar

Posted 30 August 2006 @ 07:55 pm EET     Print     Reprint     E-Mail     Comments

LONDON (AP) - The euro struck a fresh historic high against the yen and climbed against the dollar, as traders took their lead from interest rate news, analysts said. Elsewhere, China's yuan hit the highest level against the dollar since its revaluation a year ago. The European single currency climbed to 1.2833 dollars in early European trading from 1.2823 dollars late in New York on Tuesday.

The dollar gained to 116.95 yen, from 116.59 yen on Tuesday. Also on Wednesday, the euro hit a new record high of 150.25 yen. The single European currency had already topped the 150 yen mark briefly Tuesday for the first time since its launch in January 1999 on expectations that interest rates will rise faster in the eurozone than in Japan. "Relative rate expectations remain the driving force for currency markets," Hans Redeker, BNP Paribas' global head of foreign exchange strategy, said Wednesday.

The European Central Bank is expected to leave rates on hold at a meeting Thursday but investors will be looking to whether president Jean-Claude Trichet signals that further monetary tightening is likely in October.Meawnhile the minutes from the Fed's August 8 meeting, released Tuesday, showed policymakers fretted about pushing US interest rates so high as to choke off growth in the world's largest economy.

After 17 consecutive hikes, the Federal Open Market Committee left the Fed funds rate unchanged at 5.25 percent at the meeting three weeks ago.In other interest rate news, the Swedish central bank said on Wednesday it had decided to hike its leading interest rate by 0.25 percentage points, taking the repo rate to 2.5 percent, to rein in inflationary pressure. Elsewhere, the yuan touched the highest level against the dollar since the Chinese currency's revaluation in July 2005. The yuan hit a high of 7.9565 against the dollar on Wednesday.

A stronger yuan would help reduce Chinese exports and help slow down the nation's powerhouse economy, analysts contend. The euro was changing hands at 1.2833 dollars against 1.2823 on Tuesday, 150.09 yen (149.52), 0.6751 pounds (0.6752) and 1.5758 Swiss francs (1.5758). The dollar stood at 116.95 yen (116.59) and 1.2277 Swiss francs (1.2287). The pound was being traded at 1.9006 dollars (1.8984).On the London Bullion Market, the price of an ounce of gold advanced to 616.10 dollars per ounce, from 613.40 dollars late on Tuesday.