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Dollar under pressure as EU warns on euro rise
Date 08/10/2010 13:31  Author webmaster  Hits 910  Language Global
08 OCT 2010

AFP

LONDON, Oct 7 - The euro rose sharply on Thursday as the European Union warned that its strength could undercut economic recovery and the IMF head highlighted the threat of a destabilising currency war.

The euro jumped close to 1.40 dollars and the dollar plumbed fresh 15-year lows against the yen on persistent concern about the US economic outlook.

Decisions by the European Central Bank and the Bank of England to keep record low interest rates unchanged were as expected, with markets waiting for ECB comment on the outlook.

In early afternoon London trading, the European single currency was at 1.3970 dollars, off an early high of 1.3997 dollars, its best level since the beginning of February and up from 1.3928 dollars in New York late Wednesday.

Against the Japanese currency, the dollar slumped to 82.39 yen, levels last seen in May 1995 and below the rate which triggered Japanese intervention to push it lower for the first time in six years on September 15.

The dollar's tumble meanwhile allowed gold to strike yet another record high, this time at 1,364.77 dollars an ounce as investors sought out the metal's traditional safehaven qualities.

The European Commission said the rise of the euro was "disproportionate" and could affect economic recovery across the bloc.

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