MercoPress. South Atlantic News Agency

US dollar continues gains against euro, yen

The US dollar continued its march yesterday, with a near two-month high against the euro and six-month high against the yen two days before the European Central Bank meets to discuss interest rates.

The euro bought US$1.2850 in late afternoon European trading, down from US$1.2897 in New York late Monday. The pound rose slightly to US$1.8788 from US$1.8755 on Monday after British Prime Minister Tony Blair called for May 5 national elections.

The dollar rose to 108.75 yen before falling back to 108.27, still above the 108.26 yen it bought in New York late Monday.

The last time the US currency was that high against the euro was Feb. 10, and Oct. 20 against the yen.

The European Central Bank, which sets monetary policy for the 12 euro countries, holds a council meeting tomorrow in Frankfurt. No change in interest rates is expected, but the bank's comments will be closely watched.

The Bank of England meets the same day to decide whether it should adjust its interest rate.

After languishing last year, the dollar has been boosted lately by the expectations of higher US rates, which tend to make securities denominated in dollars relatively more attractive.

The market is expecting the US Federal Reserve to keep raising interest rates this year, helping nudge the dollar higher, despite nagging worries about the US trade and budget deficits that have weighed on the dollar.