U.S. Dollar Nears 2-Yr. High Against Euro

The Associated Press
Wednesday, November 9, 2005; 4:05 PM

NEW YORK -- The dollar rose against the euro Wednesday as concerns about unrest in France and a worse-than-expected economic forecast for Germany pushed the common currency near two-year lows against the U.S. dollar.

In late New York trading Wednesday, the 12-nation euro bought $1.1763, down from $1.1787 the night before in New York and its lowest levels since November 2003. The euro fell as low as $1.1711 on Tuesday before rebounding slightly.

The euro fell after the German government's panel of economic advisers warned that the economy would grow by only 1 percent next year amid high oil prices.

The independent panel predicted that gross domestic product will grow by 0.8 percent this year _ half of last year's rate. Its forecast for next year was below the outgoing government's projection of 1.2 percent growth.

The dollar has been buoyed recently by signs of economic strength as well as continuing increases in the U.S. Federal Reserve's benchmark interest rate. Policy-makers raised the rate last week by a quarter percentage point to 4 percent _ the highest rate in more than four years _ in the 12th such increase since June 2004, and indicated they would continue to do so at a measured pace.

Higher rates boost the U.S. currency by making dollar-denominated securities relatively more attractive to investors. Growing foreign investment in the U.S. bond market has pushed the dollar higher and the euro lower.

The European Central Bank left its rate unchanged at 2 percent, where it has been for almost 2 1/2 years.

On Wednesday, ECB President Jean-Claude Trichet said the bank would raise interest rates if needed, including at next month's meeting.

"We could move at any time," he told reporters, adding that "any time" included the possibility of a move when the bank's Governing Council meets Dec. 1.

The British pound fell to $1.7426 in late New York trading Wednesday from $1.7434 late Tuesday. The dollar also rose to 117.47 Japanese yen from 117.12, and to 1.3100 Swiss francs from 1.3091. It slipped, however, against the Canadian dollar, to 1.1833 from 1.1874.

The violence in France continued for a 13th straight day overnight, as rioters shrugged off emergency laws that took effect Wednesday, looting and burning two superstores, setting fire to a newspaper office and paralyzing Lyon's subway system with a firebomb.

© 2005 The Associated Press