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Last Updated: Friday, 16 January, 2004, 18:26 GMT
Dollar extends rally against euro
John Snow
Mr Snow's comments have helped to firm the currency
The US dollar has strengthened against most global currencies, prompting some analysts to predict that its recent slide may now be over.

Underpinning the market were comments by US Treasury Secretary John Snow who said the current administration favours a strong dollar.

The European Central Bank, meanwhile, repeated that it was concerned about the euro's strength and volatility.

The comments were being read as an attempt to stabilise the currencies.

Rebound

There also was evidence that foreign investors are buying more US assets, while a closely-watched report showed that consumer confidence climbed to a three-year high in January.

On Friday, the dollar climbed to $1.2396 against the euro from $1.2597 in earlier trading, well below its $1.29 record low of five days ago.

Against the British pound the US currency strengthened to $1.8015 from $1.8227.

The Japanese yen, however, proved more stubborn, climbing 106.60 per dollar from 106. Currency traders said the Bank of Japan had intervened again on Friday.

The dollar had chalked up a series of record lows against the euro in the first fortnight of 2004, and an 11-year low against sterling, due to worries about huge US trade and budget deficits.

Investors also said that it seemed the US was unconcerned about the drop in the value of its currency as they wanted to boost exports to drive an economic recovery.

Clear stance

Answering questions on the floor of the New York Stock Exchange, Mr Snow was forthright about the position of George W. Bush's government.

"We support a strong dollar," he said.

"A strong dollar is in the national interest".

In Europe, policy makers also were breaking their silence over recent events.

Concern has been spreading among European political leaders that rise in the value of the euro against the dollar could jeopardise European growth by choking exporters' sales to the US.

Otmar Issing said on Friday that the ECB was concerned about the euro's "large volatility".

Earlier in the week, European Commission President Romano Prodi and French Prime Minister Jean-Pierre Raffarin both said that it was "not positive" for the eurozone to suffer such a strong shift in the single currency's exchange rate.


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