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New record for euro - dollar rate

©

Latest update : 2008-04-17

The euro reached its all-time high of 1.59 dollars on Thursday as Europe's single currency continued to win support amidst news of record-high inflation in the eurozone. Oil set a record above 115 dollars a barrel.

The euro hit an all-time record high of 1.5984 dollars on Thursday as the European single currency continued to win support from news of record-high inflation in the eurozone, traders said.

That beat the previous high point of 1.5979 that was set on Wednesday.

The euro has struck a series of record highs above 1.59 dollars since official data showed eurozone inflation reached an annual rate of 3.6 percent in March -- the highest since the launch of the single currency in 1999.

Analysts said the inflation data was likely to mean the European Central Bank would hold borrowing costs for the foreseeable future.

The bank's benchmark rate, 4.00 percent, is already substantially higher than that of the US Federal Resereve, which stands at 2.25 percent.

The higher interest rate offered in the eurozone -- and the likelihood that it will not change -- makes the euro more attractive than the dollar, analysts said.
 

Oil at record over 115 dollars

 

Oil set a record above $115 a barrel on Thursday as a drop in U.S. gasoline inventories raised concern of tighter supply and a weak dollar boosted investor demand for commodities.

 

A U.S. government report on Wednesday showed a surprise drop in crude inventories and a larger-than-expected decline in stocks of gasoline. Demand for the motor fuel usually peaks in the summer.

 

"Summer driving season is approaching. And even in a recessionary economy, seasonal gasoline demand will pick up, which adds to stress on the global oil supply chain," said Jan Stuart at UBS.

 

"But before we get there, the stress already put onto the supply chain globally by middle distillate demand and supply dynamics is not still abating," he said in a research note.

 

U.S. crude set a record of $115.54 a barrel and by 0958 GMT was trading at $115.24, up 31 cents. Oil has hit new peaks for three consecutive days. London Brent set a record of $113.38.

 

London's gas oil, the benchmark for heating oil and diesel in Europe, set the pace for crude oil and refined product futures, gaining 1.1 percent to $1,056.25 a tonne.

 

In the latest indication of strong demand for middle distillates, China's top refiners were set to extend unusually high imports into a sixth straight month.

 

PetroChina, China's second-largest refiner, has bought 300,000 tonnes of gas oil for May, traders said.

 

The weakness of the dollar continued to attract investors into commodities to hedge against inflation and bet oil's rally would help compensate for the shrinking value of dollar assets in their portfolios.

The euro hit a record high against the dollar on Thursday.

 

Date created : 2008-04-17

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