*NEWS*EURO SCALES $ 1.60 FOR THE FIRST TIME

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*NEWS*EURO SCALES $ 1.60 FOR THE FIRST TIME

 user 2008-04-23 at 1:35:15 pm Views: 51
  • #19563

    Euro scales $1.60 for first time
    The
    euro has hit a record peak against the US dollar on expectations of
    higher interest rates in the euro zone.It rose as high as $1.6019 as
    weak US housing market data underscored fears over the health of the US
    economy.The euro has rallied in recent months and Tuesday’s peak came
    as European central bankers raised the prospect of higher rates to
    control inflation.Higher interest rates make bank deposits and other
    euro-denominated investments more attractive.Most other central banks
    are cutting the cost of borrowing as they look to limit the impact of a
    global economic slowdown.The euro was trading at 80.08 pence, near the
    record high of 80.98p hit last week.”Interest rate differentials are
    really favouring the euro right now,” said Camilla Sutton, a currency
    strategist at Scotia Capital in Toronto.European Central Bank governing
    council member Christian Noyer said the bank would do what was needed
    to bring inflation back to its target of just below 2%, adding it would
    move rates if needed.

    That followed similar comments from fellow
    governing council member Yves Mersch.While the strong euro may be good
    news for many savers and investors, it poses problems for European
    exporters because it makes their products more expensive in the United
    States, a key sales market.On Tuesday, Airbus announced a rise in
    prices across its range of aircraft, blaming high metals prices and the
    weakness of the US dollar.The dollar has suffered because the Federal
    Reserve has cut interest rates sharply in recent months.Industry data
    on Tuesday showed that sales of existing US homes fell in March as a
    housing market slump continued.