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Friday 21st of November 2008
October 5, 2006

Eurozone interest rates rise


by Elaine Frei

The euro weakened on Thursday after the European Central Bank raised interest rates in the Eurozone by 25 basis points to 3.25 percent and the president of the ECB made comments after the Bank’s meeting that indicated another rate hike is coming before the end of the year, which most analysts expect to come in December, rather than in November. Some analysts based this opinion on the missing word “vigilance” from the ECB president’s remarks, but others refused to assign any significance to this aspect of his comments.

The euro dropped 0.2 percent to ¥149.35 versus the Japanese yen, while it declined 0.3 percent against the US dollar to $1.2680.

In the UK, meanwhile, the Bank of England’s Monetary Policy Committee held interest rates steady at 4.75 percent, which was expected by most analysts despite the feeling of some that a surprise hike was coming. The euro was 0.3 percent higher versus sterling to £0.6760, while the UK currency dropped 0.5 percent against the US dollar to $1.8760.

The US currency remained steady at ¥117.70 in relation to the yen as investors waited for Friday’s release of the latest US unemployment figures.

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