Euro rises vs dollar after ECB keeps rates flat

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Euro rises vs dollar after ECB keeps rates flat

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Euro rose against dollar after ECB kept interest rates unchanged despite a growing economic crisis.

07 October,2011 06:01 am

The euro rose against the dollar and other currencies after the European Central Bank kept interest rates unchanged despite a growing economic crisis. Experts say the euros rally may be short-lived.The euro rose to $1.3393 from $1.3240 earlier Thursday. It bought $1.3351 late Wednesday.The European Central Bank (ECB) said it will leave its key interest rate at 1.5 percent, but will make emergency loans to European lenders. Many had expected the central bank to cut rates to encourage lending and investment. Europes economy is barely growing.Lower rates would make the euro less attractive to traders by reducing the returns from fixed-income investments such as government debt.The euro has been rising against the dollar since fears of a default by Greece pushed it to a nine-month low on Monday. Many analysts expect the euro to resume its decline, falling to or below $1.30 before the end of the year. Strategists with Bank of America Merrill Lynch lowered their year-end forecast to $1.30 last week. Capital Economics forecasters say it will hit $1.10 by 2013.The euro also rose strongly against the Japanese yen, the British pound and the Swiss franc.In other trading, the pound fell to $1.5395 from $1.5467 late Wednesday. It dove to $1.5297 early Thursday after the Bank of England surprised traders with a plan to inject $116 billion into the British economy.