Euro rises against US dollar

The 13-nation euro rose Wednesday against the U.S. dollar amid renewed speculation about a possible further interest rate cut from Washington.

Photo: Euro rises against US dollar

In morning European trading the euro was at US$1.4138, up from US$1.4098 late Tuesday in New York.

The British pound rose to US$2.0438 from US$2.0368 in New York, while the dollar rose slightly to purchase 117.29 Japanese yen from 117.21 on Tuesday.

The euro had been trading about two U.S. cents off its all-time high of US$1.4282, set Oct. 1, before the release on Tuesday of minutes of the Federal Open Market Committee, which led many to speculate another interest rate cut was being considered in the United States and sent the dollar into a tailspin.

"With a clear suggestion that we're going to see further rate cuts from the Fed in due course, the dollar has slipped back once again," said James Hughes, a market analyst with CMC Markets.

"Today's agenda is once again relatively muted, but any further clues as to precisely when the Fed may make its next move will doubtless provide further direction as a result."

Lower interest rates, used to jump-start the economy, can weaken a currency as investors transfer funds to countries where their deposits and fixed-income investments bring higher returns.

The dollar's recent decline began in earnest when the Fed decided last month to cut its benchmark interest rate by more than expected to 4.75 percent in reaction to the U.S. subprime credit debacle.

The recent rise of the euro, which makes exports from the euro zone more expensive in the U.S. and elsewhere, has raised calls from politicians for the European Central Bank to try to do more to slow it down in order to avoid economic slowdown.