ECB Raises rates to 4.25%

bloomberg:

July 3 (Bloomberg) -- The euro traded near the highest level in more than two months against the dollar on speculation the European Central Bank will signal it may keep raising interest rates after lifting borrowing costs today to combat inflation.

Europe's single currency climbed as policy makers boosted the refinancing rate 25 basis points to 4.25 percent, the highest since August 2001. ECB President Jean-Claude Trichet told Germany's Die Zeit newspaper yesterday there's a risk of inflation ``exploding.'
...

All but one of 58 economists surveyed by Bloomberg News had expected policy makers to raise borrowing costs today.

- FT

- nytimes

USD down to 63% of foreign exchange reserves

FT on Euro vs USD, june 30 2008:

Analysts at Goldman Sachs advised their clients to keep betting on a strengthening euro...

Data from the International Monetary Fund on Monday showed the proportion of foreign exchange reserves kept in dollars fell in the first quarter to a record low of 63 per cent of total allocated reserves, from 64.02 per cent in the previous quarter.

Mr Stannard said: "That has been a big structural factor underpinning the dollar's decline but there are signs that process is going to slow down now."

bloomberg on USD, jun 30 2008:

The dollar accounted for 63 percent of the reserves held by governments and central banks at the end of the first quarter, compared with 64 percent at the end of December, the International Monetary Fund said in Washington.