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Last Updated: Friday, 9 May, 2003, 12:42 GMT 13:42 UK
Euro hits fresh highs

The soaring euro has hit yet more highs, including lifetime records against the Japanese yen and UK pound.

The rises followed Thursday's decision by the European Central Bank not to lower eurozone interest rates.

Against the Japanese currency, the euro hit an all-time high of 135.3 yen before falling back slightly. Against the pound, it touched 71.94 pence in morning trade before dipping.

"Things seem to have settled down a bit now and after a very choppy few days traders are saying 'enough's enough'," said Ian Gunner, head of foreign exchange at Mellon Bank.

The euro also bought $1.1537, up more than half a US cent on the four-year records set in late New York trading on Thursday.

The European currency has been buoyed by the woes of other economies, especially the US, where economic recovery is not emerging anywhere near as resolutely as some had predicted.

Ups and downs

In Europe itself, there is little fundamental reason for strength; economic growth continues to be feeble, dragged back by the sluggish performance of Germany.

But there seems to be a growing perception both that Europe is not that much worse-off than some other regions, and that policy-makers would like to see the euro gain in strength.

Wim Duisenberg, the normally cautious president of the European Central Bank, said on Thursday that there was nothing excessive about the value of the currency.

At the same time, bank deposits in the eurozone yield interest rates twice as high as those in the US, thanks to aggressive rate-cutting by the Federal Reserve.

In relation to Japan, the euro has been buoyed by increasing concerns that the Tokyo government would like the yen to fall and stay low, since a weak currency would help the country's exporters.

Pound and dollar hit new euro lows
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08 May 03  |  Business

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