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Thursday 20th of November 2008
April 11, 2006

Euro strengthens, yen weaker


by Elaine Frei

The euro was stronger in relation to the US dollar and sterling on Tuesday, but it fell from a four-day high against the greenback after the ZEW survey of investor sentiment in German showed an unexpected drop from 63.4 in March to 62.7 in April. It was the third decline in a row, most likely because of concerns over the tightening of monetary policy in the eurozone.

The euro gained 0.1 percent versus both the greenback and sterling, to $1.2121 and £0.6938 respectively. Sterling, meanwhile, added 0.1 percent in relation to the US dollar, to $1.7443.

The Norwegian krone, the Canadian dollar, and the Swedish krona all gained ground on the euro on the day. Rising oil prices helped the krone add 0.3 percent versus the shared currency, to NKr7.8262, while the Canadian dollar was up 0.1 percent to C$1.146 against the euro. The krona was helped by positive news on employment and higher than expected inflation data that meant a possible rise in interest rates to 2 percent soon. The Swedish currency added 0.4 percent to SKr9.3268 versus the euro.

The Japanese yen lost strength in relation to the greenback and the euro after the Bank of Japan declined to raise interest rates in that Asian nation. The governor of the Bank said that it will more than likely keep rates very low as long as inflation remains under control. Most analysts interpreted these comments to mean that it will be at least the third quarter before rates are raised.

The yen dropped 0.2 percent against the US dollar, to ¥118.63, and it lost 0.4 percent to the euro to ¥143.82.

The Icelandic krona hit a 23-month low of IKr74.27 in relation to the US dollar, a drop of 1.3 percent even though the head of the central bank there said that monetary policy could be tightened again to get inflation under control.

The Australian dollar added 0.5 percent to $0.7323 in relation to the US dollar on higher gold prices and a higher business conditions index from the National Australia Bank. Gold also helped the South African rand advance by 0.3 percent to R6.1225 versus the greenback.

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