June 17, 2008	Tuesday	Jamadi-us-Sani 12, 1429

LONDON, June 16: The euro firmed against the dollar on Monday as record high eurozone inflation boosted expectations the European Central Bank would raise interest rates next month.

The single European currency in late-day trade was at $1.5471 after $1.5384 late Friday.

The dollar was meanwhile at 108.23 yen, up from 105.15 on Friday.

The euro was supported by news that inflation in the 15-nation eurozone hit a record 3.7 per cent in May, driven by soaring oil and food prices to the highest level since the single European currency was launched in 1999.

The rate, revised up from a first estimate of 3.6 per cent, marked a sharp pick-up in 12-month inflation from April, when consumer prices in the eurozone rose 3.3 per cent.

“It’s going up. It’s not a good figure. Inflation is our main concern (as) regards the economy at the moment,” said Amelia Torres, the European Commission’s spokeswoman on economic and monetary affairs.Investors were increasingly convinced the ECB at its July 3 meeting will raise its benchmark interest rate, a move signalled earlier this month by ECB head Jean-Claude Trichet in the face of mounting inflation pressure.

“The ECB seems set to pull the interest rate trigger and lift rates from 4.00 per cent to 4.25 at its July 3 meeting,” said Howard Archer of Global Insight.

Added ING analyst Carsten Brzeski: “High oil and food prices are already clearly denting any hopes for a pick-up in private consumption but only a severe deterioration in economic confidence indicators might prevent the ECB from pulling the rate trigger at the next rate-setting meeting.”

The euro had gotten off to a sluggish start earlier in the day as Group of Eight finance ministers meeting in Japan steered clear of currency issues in their final communiqué.

Elsewhere, the pound remained well bid despite a gloomy economic outlook from the CBI business lobby which predicted that British growth in 2009 would slow to its lowest pace since 1992.

In London Monday, the euro changed hands at $1.5471 against $1.5384 late on Friday, at 167.40 yen (166.38), 0.7879 pounds (0.7894) and 1.6150 Swiss francs (1.6101).

The dollar stood at 108.23 yen (108.15) and 1.0440 Swiss francs (1.0460).

The pound was at $1.9636 ($1.9481).

On the London Bullion Market, the price of gold firmed to $888.25 per ounce at the fixing from $866 late on Friday.—AFP