Euro begins 2007 in record mood

LONDON – The euro struck a near three-week high against the dollar and all-time peaks against the yen and Swiss franc in European trade on Tuesday.

The Tokyo and Singapore markets remained closed for New Year celebrations, while US trading was put on hold to allow Americans to mark the recent passing of former president Gerald Ford. The euro hit as high as US$1.3288 dollars in early European exchanges on Tuesday, the highest point since December 13, 2006.The European single currency also hit ¥157.72 and 1.6112 Swiss francs – both of which are historic levels.It later stood at US$1.3286, from US$1.3197 late on Friday in New York.The dollar dropped to ¥118.75 from ¥118.96 late on Friday.The euro climbed strongly due to expectations that the European Central Bank will continue to hike interest rates during 2007, economists said.”We expect at least two further 25 basis point increases from the ECB, which will push the refi rate to 4.0 per cent by the end of the second quarter from the current 3.50 per cent,” Calyon analyst Stuart Bennet said.During the course of 2006, the euro gained 11.4 per cent against the dollar, 12.0 per cent against the yen and 2.7 per cent against the Swiss franc.Analysts believe the principal driver of the foreign exchange market last year had been differences in interest rates across economic zones.Interest rates in the US have been held steady since last August at 5.25 per cent, giving momentum to the European currency in recent months, while recent data in Japan has dampened expectations of another rate hike there.The euro is meanwhile now being used by 13 countries after Slovenia, on Monday, became the first former communist state to join the European Union’s common currency.Slovenia’s adoption of the euro comes five years after euro bills and coins were introduced, almost three years after Slovenia acceded to the EU, and 15 years after Slovenia declared independence from the former Yugoslavia.The euro replaces the tolar, a currency introduced in 1991 as a symbol of the tiny country’s independence and an instrument aimed at cutting Belgrade’s monetary control over the Slovenian economy.The euro was changing hands at US$1.3286 against US$1.3197 on Friday, ¥157.68 (¥157.08), £0.6734 (£0.6733) and 1.6106 Swiss francs (1.6097).The dollar stood at ¥118.75 (¥118.96) and 1.2131 Swiss francs (1.2191).The pound was being traded at US$1.9714 dollars (US$1.9596).On the London Bullion Market, the price of gold climbed to US$640.90/oz from US$635.70 early on Friday.Nampa-AFPThe euro hit as high as US$1.3288 dollars in early European exchanges on Tuesday, the highest point since December 13, 2006.The European single currency also hit ¥157.72 and 1.6112 Swiss francs – both of which are historic levels.It later stood at US$1.3286, from US$1.3197 late on Friday in New York.The dollar dropped to ¥118.75 from ¥118.96 late on Friday.The euro climbed strongly due to expectations that the European Central Bank will continue to hike interest rates during 2007, economists said.”We expect at least two further 25 basis point increases from the ECB, which will push the refi rate to 4.0 per cent by the end of the second quarter from the current 3.50 per cent,” Calyon analyst Stuart Bennet said.During the course of 2006, the euro gained 11.4 per cent against the dollar, 12.0 per cent against the yen and 2.7 per cent against the Swiss franc.Analysts believe the principal driver of the foreign exchange market last year had been differences in interest rates across economic zones.Interest rates in the US have been held steady since last August at 5.25 per cent, giving momentum to the European currency in recent months, while recent data in Japan has dampened expectations of another rate hike there.The euro is meanwhile now being used by 13 countries after Slovenia, on Monday, became the first former communist state to join the European Union’s common currency.Slovenia’s adoption of the euro comes five years after euro bills and coins were introduced, almost three years after Slovenia acceded to the EU, and 15 years after Slovenia declared independence from the former Yugoslavia.The euro replaces the tolar, a currency introduced in 1991 as a symbol of the tiny country’s independence and an instrument aimed at cutting Belgrade’s monetary control over the Slovenian economy.The euro was changing hands at US$1.3286 against US$1.3197 on Friday, ¥157.68 (¥157.08), £0.6734 (£0.6733) and 1.6106 Swiss francs (1.6097).The dollar stood at ¥118.75 (¥118.96) and 1.2131 Swiss francs (1.2191).The pound was being traded at US$1.9714 dollars (US$1.9596).On the London Bullion Market, the price of gold climbed to US$640.90/oz from US$635.70 early on Friday.Nampa-AFP