© Reuters. The euro rises to almost 1.07 dollars due to risk tolerance
Frankfurt (Germany), Mar 6 (.).- The euro today approached the level of 1.07 dollars after the increase in risk tolerance among investors, which has weakened the greenback against many currencies.
The euro was trading around 4:00 p.m. GMT at $1.0680, compared with $1.0597 in the final hours of European currency market trading the previous day.
The European Central Bank (ECB) set the reference exchange rate for the euro at $1.0646.
Economic confidence fell in the euro zone in March for the first time in a few months because “the situation is fragile despite the fact that recession has been avoided,” according to Sentix.
Retail sales rose in the euro area in January by 0.3% compared to the previous month.
ECB chief economist Philip Lane said in a speech at Trinity College in Dublin that the decision on interest rates in May will depend on economic data.
“For the ECB the monetary policy priority is to ensure that inflation returns to target on time,” Lane said.
Data on core inflation, which discounts energy and food because they are more volatile, “suggests that further interest rate hikes will be appropriate after the March meeting,” according to Lane.
The exact adjustment after March should reflect information from the ECB’s next macroeconomic projections, which it will publish next week, together with the next inflation data and take into account whether the increases undertaken so far work, the Irish economist added.
The governor of the Austrian National Bank, Robert Holzmann, considers that more strong increases in interest rates are necessary in the euro area because he foresees that inflation will be very high for a long time.
Holzmann, who is a member of the Governing Council of the ECB, said in an interview with the German newspaper “Handelsblatt” that “at the moment he is in favor of raising interest rates by half a percentage point at each of the meetings in March, May, June and July”.
The ECB will most likely raise its interest rates next week by half a percentage point, from 3 to 3.50%.
Bank of Portugal Governor Mario Centeno told Italian newspaper La Stampa that the ECB must take into account in its monetary policy that inflation forecasts have been lowered in the ECB’s new macroeconomic projections.
Centeno also wants to wait to see the effect of the 300 basis point interest rate hikes undertaken so far.
The single currency was exchanged in a fluctuation band between 1.0622 and 1.0684 dollars.