The euro reached a one-week high against the dollar after European Central Bank Executive Board Member Lorenzo Bini Smaghi said the bank may need to raise interest rates as global inflation pressures mount.
The shared currency erased earlier losses that followed data showing producer prices inGermany rose 1.2 percent, faster than forecast. The pound remained higher against the euro and the dollar amid speculation that inflation may soon force Bank of England policy makers to raise interest rates.
“Yield plays are and have been the main focus of the foreign-exchange markets,” said Stephen Gallo, head of market analysis at Schneider Foreign Exchange in London. “These guys are ratcheting up their rhetoric and are clearly concerned about what weakness in currencies can do to imported inflation.”
The euro rose 0.1 percent to $1.3627 at 9:10 a.m. in New York and touched $1.3646, the highest level since Feb. 10. Earlier it dropped as low as $1.3546. The common currency gained 0.3 percent to 113.69 yen, from 113.37 yesterday. The dollar was little changed at 83.34 yen, compared with 83.31. Read more
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