Dollar rallies to highest in month

THE dollar rallied to the highest in almost a month against the euro after French Prime Minister Jean-Pierre Raffarin joined German Chancellor Gerhard Schroeder in calling for the European Central Bank to cut interest rates.

The US currency also rose to the highest in almost three months versus the yen, after gaining 3.9% since February 12.

It strengthened against the British pound, Swiss franc and South African rand.

Schroeder, in his second comment on the currency in two days, said in an interview with the Financial Times that the euro’s level versus the dollar is “not satisfactory”.

Raffarin said the speed and extent of the euro’s gain is “a concern”.

The chancellor, who is travelling in the US, will discuss the dollar’s decline with President George W. Bush today in Washington, a German official said.

ECB spokesman Jukka Ahonen declined to comment on Schroeder’s remarks.

“Suddenly, comments from European officials expressing concern about the level and rate of change in the euro seem to have had an impact,” said John Rothfield, senior currency strategist at Bank of America Corp. in San Francisco. Slowing inflation in Europe “makes the case for a rate cut, even independent of where the euro is, more compelling”.

Expectations for a rate reduction are rising, futures trading shows.