The Euro increased against all sixteen of its major trading currencies, after the German Chancellor, Angela Merkel, stated that Germany’s economic growth rate is impressive and the European Union is committed to maintaining the Euro. The EURO-USD exchange rate rose by 0.2847 percent to 1.4369.
Inflation in Europe is around 2.7 percent, higher than the European Central Bank’s target inflation rate of 2 percent. However, Europe has not disintegrated into a double-dip recession yet, and, taking cue from the comments of its major financial ministers and policy makers, there is a huge possibility of the EU raising interest rates in order to combat inflation. In such a scenario, with the US Federal Reserve maintaining interest rates at record low levels and the US economy putting on a sluggish growth, the Euro appears to be the more attractive currency as compared to the Greenback.
The Japanese Yen fell against the Euro, as the Japanese Prime Minister,Naoto Kkan, declared that he would step down from his post after completing the recovery efforts in Japan. The USD-JPY exchange rate rose by 0.0723 percent to 81.0090.