NEWS | Wednesday, 03 September 2008

As Euro drops, analysts not hopeful of lower interest rates

The euro yesterday dropped to below $1.45, its lowest point since last February.
Analysts said the fall was largely attributed to the market’s anticipation of lower interest rates within the eurozone, tied with economic growth in the US.
In early London trade yesterday, The Sterling also reached the lowest point against the dollar for more than two years.
Meanwhile, for the first time in the last four months, oil prices fell to below $105 yesterday.
While many hope for a European Central Bank (ECB) decision to lower interest rates from the current 4.25 per cent, analysts do not see the ECB considering this option in its decision tomorrow.
As the ECB holds on to high interest rate tresholds, its plan to curb inflation to just below 2 per cent does not seem immediately attainable when considering a 3.8 per cent figure for inflation within the eurozone in August, albeit 2 per cent lower than the all-time high of 4 per cent witnessed in July.
The euro changed hands at 1.4524 dollars against 1.4606 late on Monday, at 158.15 yen, 0.8137 pounds and 1.6077 Swiss francs.
The dollar stood at 108.93 yen and 1.1073 Swiss francs.
The sterling was at 1.7851 dollars (1.8218).