Dollar on the ropes against European currencies

TOKYO, April 18, 2007 (AFP) – The dollar languished at a near 15-year low against the British pound and a two-year trough versus the euro in Asian trade Wednesday as the market bet on further hikes in European interest rates, dealers said. The pound sterling firmed to 2.0074 dollars in Tokyo morning trade from 2.0063 in New York late Tuesday, when it had topped 2.0 dollars for the first time since 1992 after unexpectedly strong British inflation data.

The euro gained to 1.3575 dollars from 1.3564, just shy of Monday’s high of 1.3595, which was the strongest since December 2004.

Speculators rushed to buy the European currencies in anticipation of rising returns on assets in the eurozone and Britain, dealers said.

“The difference between the economic performances of Europe and the US is driving currency trading,” said Commerz Bank treasurer Ryohei Muramatsu.

“Investors are taking advantage of widening interest rate differentials. While data on the US economy is patchy the strength of the European economies stands out,” he added.

The dollar eased to 118.71 yen in Tokyo morning trade from 118.90 in New York late Tuesday. The euro slipped to 161.11 yen from 161.29.

The dollar was hit by softer-than-expected core i