U.S. Dollar Rises Against Major Currencies
Tuesday March 28, 2006 4:04pm
NEW YORK (AP) - The dollar rose against most major currencies Tuesday after the Federal Reserve hiked interest rates for the 15th consecutive time and hinted at further credit tightening.The euro bought $1.2009 in afternoon New York trading, down from $1.2012 in New York late on Monday. The British pound slipped to $1.7434 from $1.7463.
The dollar rose against the Japanese currency, climbing to 117.91 yen from 116.69 on Monday.
Under new chairman Ben Bernanke, the central bank raised short-term interest rates by a quarter percentage point to 4.75 percent as the markets widely had expected. The Fed's statement on the meeting left open the possibility of further rate increases.
"The statement gave no particular indication that the Fed is close to being done with raising rates," said Dan Katzive, a currency strategist at UBS AG. "The dollar is firming, and the markets are discounting a little bit more Fed tightening."
Higher interest rates tend to push up a nation's currency by boosting returns from locally denominated investments, making them more attractive.
Bob Sinche, head of global foreign exchange strategy at Bank of America, said the markets are now anticipating another quarter-point hike at the Fed's next meeting in May with an increased possibility of further hikes beyond that.
"But we think the markets may be getting ahead of themselves," he said.
The dollar's afternoon performance erases gains the euro made earlier in the day on news that business confidence rose to new highs in Germany and Italy.
In other trading, the dollar bought 1.3082 Swiss francs, down from 1.3085 late Monday, and 1.1699 Canadian dollars, up from 1.1684. |
