Euro continues slide versus dollar

The euro continued to slide against the US dollar on Friday after the European Central Bank left its interest rates on hold and left markets believing that no more increases are likely soon – if at all.

The euro bought $1.5215 (Dh5.60) in early European trading – off a low for the session of $1.5191, but still more than a cent below the $1.5328 it bought in New York late Thursday.

The Bank of England also left rates unchanged on Thursday, and the pound also fell. It was down to $1.9310 early Friday from $1.9436.

Higher interest rates in Europe and elsewhere can push down the dollar as investors transfer their funds from American assets to overseas, where they can get higher returns on their investments. Lower interest rates can weigh on a currency.

Comments by ECB President Jean-Claude Trichet after Thursday’s decision “confirmed that the window of opportunity for further rate hikes has been slammed shut by the cold blast of negative data releases that swept through the euro zone in the last few weeks,” said Marco Annunziata, an economist at UniCredit in London.

The ECB last month moved to cool inflation by raising borrowing costs for the first time in a year, while the Bank of England has left rates unchanged since April, when it reduced its benchmark figure by a quarter of a percentage point.

Recent economic indicators from major euro zone economies such as Germany, France and Italy have painted a gloomy picture.

In other trading Friday, the dollar also was a little higher against the Japanese currency. It rose to ¥109.77 from ¥109.45.