Dollar hits two-month high on euro

THE dollar struck a two-month high against the euro yesterday, driven by the belief the US Federal Reserve may introduce a tough interest rate regime.

Concerns are beginning to emerge about the inflation rate outlook in the US as the economy gets back on to trend growth. As a result of such expectations the dollar climbed from $1.2811 to the euro on Monday to $1.2809 yesterday.

How long this will last is hard to judge. If Federal Reserve chairman Alan Greenspan signals tougher measures then the dollar could continue to rally.