Euro Gains as Merkel Backs Currency, Trichet Proposes Ministry
Baku, June 2 (AZERTAC). The euro gained versus the dollar and yen as German Chancellor Angela Merkel said she is committed to the currency and European Central Bank officials backed the creation of a euro-region finance ministry.
The euro rose one percent to $1.4466 as of 7:08 a.m. in New York from $1.4328 yesterday, when it reached $1.4459, the most since May 6. Europe`s common currency climbed 0.7 percent to 116.85 yen. The dollar was little changed at 80.77 yen after advancing 0.5 percent.
The cost of living in the euro region increased 2.7 percent in May, a report showed on May 31. Inflation in the region has breached the ECB`s 2 percent limit since December and is forecast by its staff to average 2.3 percent this year.
The bank raised its key interest rate by 25 basis points to 1.25 percent in April, even as Portugal joined Greece and Ireland in requesting financial aid from the European Union and the International Monetary Fund. In comparison, the Federal Reserve and Bank of Japan are holding rates near zero.
“We don`t have a euro problem in Europe,” Merkel said in a speech in Singapore today on the final day of a three-day Asia trip that also took her to India. “We have more of a debt problem. Financial markets doubt whether some EU states can manage their debt in the long-term.” Germany is committed to the euro, which is stable, she said.
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