ECB fights off interest rate calls

Board members of the European Central Bank on Monday again called current interest rates in the eurozone “appropriate” and said once more that rate cuts would not be forthcoming, despite continuing rumors to that effect.

One board member said that decreased rates could be “damaging” because they would bring property price inflation.

Meanwhile, a survey of business confidence in Germany revealed a rise to 93.3 in June, up from 92.90 in May, the first rise in confidence after four declines in a row.

This allowed the euro to advance in relation to the US dollar, the yen, and sterling. The euro gained 0.5 percent in relation to the dollar, to $1.2149, it advanced 0.6 percent against the yen to ¥132.89, and rose by 0.4 percent to £0.6657 in relation to sterling.

Meanwhile in Japan, the yen fell a fraction in relation to the US dollar and sterling.

Rising oil prices had a lot to do with the weakness of the yen on fears that higher oil prices will diminish Japan’s trade surplus.

Also key was the continuing saga of Chinese revaluation as the Chinese premier, Wen Jiabao said that “undue haste” to revalue the renminbi should be avoided.

The yen stood at ¥109.38 in relation to the dollar and at ¥199.63 against sterling.

Back in Europe, the Polish zloty lost 1.2 percent in relation to the euro to 4.0664 zlotys in anticipation of an interest rate cut tomorrow below the current 5.5 percent. It will be the third rate cut in Poland this year.

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