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Sun, Aug 31, 2008 - Page 10 News List

Dollar firms against euro on hope for US rate hike

AFP , NEW YORK

The dollar firmed against the euro on Friday, bolstered by rising US inflation that stirred speculation the Federal Reserve will raise interest rates.

The euro was changing hands at US$1.4673 around 9pm GMT, down from US$1.4708 late on Thursday.

However, the US dollar slipped against the Japanese currency, falling to ¥108.75 from ¥109.47.

The dollar was boosted by a US Commerce Department report showing inflation rose to an annual 4.5 percent last month, the highest rate since February 1991.

Elevated inflation could encourage the Fed to raise its key base rate, analysts said.

The central bank has held the federal funds rate at a low 2 percent for two straight policy sessions as it focuses on sluggish economic growth.

The dollar continued to benefit from Thursday’s sharp upward revision of second-quarter GDP growth to a robust 3.3 percent from an initial estimate of 1.9 percent.

In contrast, other major economies, such as the eurozone, Britain and Japan, are struggling with weak growth amid year-old financial market turmoil.

In late New York trading, the dollar rose to 1.1007 Swiss francs from SF1.0991 late on Thursday.

The pound was at US$1.8218, down from US$1.8285.

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