Thursday August 10, 2006 - 01:03:02 GMT
Reuters - www.reuters.com
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FOREX-Euro hits record high vs yen on rate gap
FOREX-Euro hits record high vs yen on rate gap
Wed Aug 9, 2006 8:20pm ET172
TOKYO, Aug 10 (Reuters) - The euro hit a record high against the super-low-yielding yen on Thursday while the dollar inched towards a two-month low against the euro as investors continued to trade on gaps in interest rates.
In early Tokyo trade, the euro was at 148.45 yen
after climbing as high as 148.60 yen , its strongest since the single European currency was launched in January 1999.
Among major currencies, the yen is the least attractive destination for foreign investors due to low overnight rates offered in Japan.
That is likely to be reinforced if the Bank of Japan holds rates at 0.25 percent, as widely expected, at the end of a two-day policy meeting that starts on Thursday.
"The euro could have another interest rate hike in the near future and the yen is going to take time to do anything, so it seems safer to sell yen crosses," said the chief trader at a European investment bank in Tokyo.
"That's why euro/yen is hitting the highs."
The dollar has shown some resilience in the wake of the Federal Reserve keeping rates steady for the first time in more than two years on Tuesday.
But with central banks in the euro zone and Britain likely to keep bumping up rates this year, the appeal of holding dollars may have diminished, traders said.
Against the dollar, the single currency rose slightly to $1.2870 , inching back up towards the two-month high of $1.2910 struck last week.
The dollar was little changed at 115.40 yen .
The high-yielding New Zealand dollar got a boost after data showed that the country added a much greater than expected 22,000 jobs in the second quarter, likely to reinforce expectations that the central bank will keep rates at 7.25 percent until next year.
The kiwi soared to $0.6342 , a two-month high.
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