Markets & Stocks
Euro at 4-year high vs. dollar
Currency reaches $1.1530 before pulling back, sets record vs. yen and pound.
May 9, 2003: 6:47 AM EDT

LONDON (Reuters) - The euro powered to new four-year highs against the dollar and record highs against the yen and the pound Friday after the European Central Bank's decision to keep interest rates on hold gave new legs to its rally.

The euro -- which has gained eight percent on the dollar and six percent on the yen in the past month -- rose above $1.1530 for the first time since January 1999, the month the currency was launched. It later pulled back to just below the $1.15 level.

The currency also hit a record high of 135.30 yen and 71.94 British pence before paring gains.

"The euro's gains have been surprisingly rapid and come after dovish comments from the Fed and a tough stance from the ECB," said Shahab Jalinoos, currency strategist at UBS Warburg.

With no major U.S. economic data due Friday, dealers said there was little reason to stand against the trend.

The ECB on Thursday left interest rates unchanged at 2.50 percent, leaving the relative yield attraction of euro zone deposits and fixed income investments intact.

The ECB's no-change decision came after the U.S. Fed earlier this week hinted at its readiness to cut rates, already at four-decade lows, citing the risk of falling inflation. Comments from ECB chief Wim Duisenberg that the current level of the euro was not excessive and that it would take longer than expected for inflation to fall below two percent gave more fodder for euro bulls.  Top of page

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