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The euro remain near its highest level in more than a year after European Central Bank President Jean- Claude Trichet said today’s interest-rate increase wasn’t necessarily the “first of a series.”
The ECB raised its key rate by 25 basis points to 1.25 percent.
“We did not decide that it was the first of a series of interest-rate increases,” Trichet said during a press conference in Frankfurt. “We will continue to do in the future” what is appropriate “to ensure price stability,” he said.
“Trichet is leaving the door open for flexibility in case he needs it and that’s why the euro sold off a little bit,” said Carl Forcheski, a director on the corporate currency sales desk at Societe Generale SA in New York. “The rate hike was very well telegraphed.”
The euro eased a bit versus its major peers after Portugal’s Prime Minister, Jose Socrates, said yesterday the nation was seeking financial assistance from the European Union.
Portugal plans to make a formal written request to the European Commission for financial aid, government minister Pedro Silva Pereira said in Lisbon. A rescue package for Portugal may be worth as much as 75 billion euros ($107 billion), two European officials with knowledge of the situation said.
“Portugal’s decision to trigger the rescue mechanism was expected,” said Lutz Karpowitz, a currency strategist at Commerzbank AG in Frankfurt. “Portugal is not a problem as long as there no contagion to Spain. People are not convinced the mechanism is large enough for that.”
The yen strengthened against the dollar after reports of a 7.4 magnitude earthquake off Japan’s coast and tsunami warnings.
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