BLBG: Euro Climbs Against Dollar as Confidence Fuels Calls for Increase in Rates
The euro climbed to a four-month high against the dollar as a report showed European investor confidence rose to the highest level in 3 1/2 years, fueling bets the European Central Bank will raise interest rates.
The 17-nation currency climbed above $1.40 for a second day. An index measuring sentiment in the euro region rose to 17.1 from 16.7 in February, Limburg, Germany-based Sentix research institute said today. ECB President Jean-Claude Trichet may reiterate that a rate increase may come as early as April when he speaks in Basel today. New Zealand’s dollar fell against most of its major peers after Prime Minister John Key said lower borrowing costs would be helpful.
“The yield difference versus the dollar shows there’s further upside to come after Trichet’s comments last week,” said Chris Walker, a currency strategist at UBS AG in London. “Trichet is unlikely to downplay the fears about a hike” so there’s “some upside risk if he does give any hints.”
The euro bought $1.4022 as of 11:13 a.m. in London, from $1.3987 in New York on March 4, when it completed a 1.7 percent weekly advance. The common currency earlier traded as high as $1.4031, the strongest level since Nov. 8. It traded at 115.12 yen, from 115.13. The dollar fetched 82.08 yen, from 82.32 yen.
The euro gained last week after policy makers left the refinancing rate at 1 percent and Trichet said they may raise borrowing costs as early as their next meeting to contain inflation. The common currency gained today even after Moody’s Investors Service cut Greece’s rating to B1 from Ba1.
New Zealand’s Treasury Department said costs from the Feb. 22 quake that wrecked the central business district of Christchurch may triple the estimated NZ$5 billion bill from a temblor that hit the city in September. The expense will be shared between the government, insurers and businesses, Finance Minister Bill English said yesterday.
The so-called kiwi bought 73.81 cents, its fifth day of declines, and 72.64 Australian cents, after reaching 72.57, its weakest level in 18 years against its Australian counterpart.
To contact the reporters on this story: Lukanyo Mnyanda in Edinburgh at lmnyanda@bloomberg.net; To contact the reporter on this story: Emma Charlton in London at echarlton1@bloomberg.net
