Currencies

Euro up against dollar as rates seen staying low

11/09/09 04:30 EST

FRANKFURT -The euro rose against the dollar Monday after the world's leading economies agreed to keep stimulus measures intact for the time being and another rise in U.S. unemployment data last week suggested U.S. interest rates will not be hiked for some time.

The 16-nation euro bought $1.4964 in European morning trade, up from the $1.4835 late Friday in New York.

The British pound also rose to $1.6771 compared with $1.6602, while the dollar edged higher to 90.12 Japanese yen from 89.93 yen late Friday in New York.

Over the weekend, finance ministers of the Group of 20 leading industrialized and developing economies said they would not yet withdraw economic stimulus measures until they saw proof of sustainable recovery. Some countries, such as the U.S., Japan and Germany, would like to start discussing strategies to unwind the measures, but they agreed to keep them in place for the time being.

That pushed investors to sell the dollar, which is typically bought as a safe haven.

Furthermore, the U.S. government on Friday said the jobless rate rose to 10.2 percent last month from 9.8 percent in September, the highest level since April 1983.

Investors regarded that as another signal that the U.S. central bank won't raise its interest rates from its low near zero percent for some time.

Higher interest rates can support a currency as investors transfer funds in search of better returns.

On Thursday, the European Central Bank and Bank of England held their interest rates steady at 1 percent and 0.5 percent, respectively.

"Early indications suggest further dollar declines, as the euro broke above last weeks highs at $1.4910 and $1.4920 and now looks set to retest the highs of last month at $1.5065 and $1.5070," CMC Markets analyst Michael Hewson said in a Monday research note.

"The euro should now find support around the $1.4815 and the $1.4825 area," he said.