April 20, 2006	Thursday	Rabi-ul-Awwal 21, 1427

LONDON, April 19: The dollar steadied on Wednesday above a seven-month low against the euro on news that US consumer prices had risen by more than anticipated in March.

In late European trading, the euro stood at 1.2336 dollars from 1.2347 dollars late on Tuesday in New York. The dollar edged up to 117.72 yen, from 117.12 on Tuesday.

Speculation that the US central bank will soon move to the sidelines mounted overnight when the minutes to the last meeting of its rate-setting Federal Open Market Committee (FOMC) confirmed that the central bank was near to ending its two-year policy of raising interest rates.

That helped the euro climb briefly to 1.2375 dollars, its highest level since September 12.

The minutes from the committee’s March 27-28 meeting gave the clearest signal to date that central bank was close to ending its policy of gradual rate hikes after 15 quarter-point increases.

At its meeting in March, the Fed raised its base rate by 25 basis points to 4.75 per cent. Most analysts expect another increase at the May FOMC meeting, but experts were divided on policy actions after that.

The yield gap between US and eurozone rates is expected to narrow towards the end of the year as the Fed stops raising rates and the European Central Bank steadily raises them. The ECB has so far raised its key interest rate twice, taking the refi rate up to 2.50 per cent.

Elsewhere, the pound was relatively firm after the release of the minutes to the last meeting of the Bank of England’s rate-setting body reinforced expectations that there would not be a rate cut in Britain any time soon.

The Monetary Policy Committee voted 7-1 in favour of keeping the key repo rate unchanged at 4.50 percent for the eighth month running.

The euro was changing hands at 1.2336 dollars against 1.2347 late on Tuesday, 145.15 yen (144.63), 0.6898 pounds (0.6924) and 1.5685 Swiss francs (1.5669).

The dollar stood at 117.72 yen (117.12) and 1.2712 Swiss francs (1.2688).—AFP