Iranian Oil Exchange
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Euro Up Against Dollar; Central Banks Hint at Switch
NewsMax.com Wires

FRANKFURT, Germany -- The euro rose against the dollar Tuesday as some Middle Eastern central banks indicated that they could switch more of their currency reserves to euros.

The euro bought $1.2257 in afternoon European trading, up from $1.2141 in New York late Monday. The British pound rose to $1.7557 from $1.7384.

The dollar also was down slightly against the Japanese currency, sinking to 117.46 yen from 117.65 yen.

At a meeting of central bank governors and monetary agencies of the Gulf Cooperation Countries in Abu Dhabi, some officials said they were considering switching more of their reserves to the 12-nation currency from the dollar.

The governor of Qatar's central bank, Abdulla Bin Khaled al-Attiyah, said up to 40 percent of its foreign exchange reserves could be held in euros.

"The percentage we are at right now is confidential, but we are looking at the movement of currencies and we are considering the overall return to our portfolio," he told reporters.

At the same conference, the head of the United Arab Emirates' central bank said a decision on whether to shift 10 percent of its foreign reserves into euros from dollars was postponed until next month.

"We will discuss the issue again in a month's time when the board meets," said Sultan al-Suwaidi.

Last month, he said the UAE could shift 10 percent of its estimated $23 billion worth of dollar reserves into better-performing euros. The bank currently holds about 2 percent of its reserves in euros, with the rest in dollars.

The euro may get support from the European Central Bank, which analysts expect to indicate Thursday that it will raise interest rates from the current 2.5 percent next month.

The dollar has benefited over the past year from a string of rate increases by the U.S. Federal Reserve, but that may be nearing an end while the ECB and the Bank of Japan move to tighten their own monetary policy.

In a Dow Jones Newswires survey of 20 leading foreign exchange dealers, the dollar was seen ending the year considerably lower versus the euro and the yen.

The median estimate saw the euro at $1.21 by the end of April, $1.22 by the end of June, and $1.27 by the end of the year.

It also saw the dollar at 115.50 yen by April 30, 115 yen by the end of May, and 108 yen by the end of the year.