Euro hits new high against dollar

The euro rose to a new all-time high against the dollar on Monday after a weekend meeting of the Group of Seven finance ministers ended without a clear statement of concern about the 13-nation currency’s strength.

The euro rose as high as $1,4348 in Asian trading, breaking a previous record of $1,4319, set on Friday, before settling back to $1,4280 in late-morning trading in Europe. That was barely changed from the $1,4281 it bought in New York late on Friday.

The dollar has been under pressure from concerns about the health of the United States economy, which have encouraged speculation that the Federal Reserve will soon cut interest rates again.

”Clearly any further speculation that we’ll see another rate cut from the Fed as soon as next week would add” more pressure, said James Hughes, a market analyst CMC Markets in London.

The European Central Bank (ECB), in contrast, has left open the option of raising its own rates, but most analysts believe such a move will not come before December.

Hughes said that, if the ECB does resume its rate increases, that could push the euro up to $1,45 — the point at which most analysts think European exporters will start to feel the pinch of the weak dollar.

Although lower interest rates can jump-start the economy, they can weaken a currency as investors transfer funds to countries where their deposits and fixed-income investments bring higher returns. Higher rates can boost a currency.

In other trading, the British pound drifted down slightly to $2,0444 on Monday from $2,05 on Friday. The dollar hit a six-week low against the Japanese yen, falling to 113,72 from 144,80 yen. — Sapa-AP

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