Dollar ends year up 15% against euro

THE dollar gained against the euro and yen in 2005, rising about 15% versus both currencies as the US interest-rate gap widened with Europe and Japan.

The US currency saw its biggest annual rally versus the euro since 1999, the year the 12-nation currency was introduced, and the first in four years. The Federal Reserve raised its target rate eight times while the European Central Bank lifted its key rate once and the Bank of Japan held rates at zero percent. The Fed has raised rates 13 times since mid-2004.

“The dollar is firmer this year because interest rates have moved more in the dollar’s favour than anticipated earlier this year,” said Daniel Katzive, a currency strategist at UBS.