Frankfurt, Germany : The euro fell against the dollar Friday after the European Central Bank said it would enact measures to encourage more lending between banks.
The 15-nation euro bought $1.4268 in early European trading, down from $1.4313 late Thursday in New York. The euro had peaked at $1.4719 in Wednesday overnight trading,
its highest point since late September, and dropped as low as $1.4182 Thursday afternoon _ a massive 5.4-cent swing.
The ECB said late Thursday it would increase the interest rate it charges banks to borrow from the ECB from a half percentage point above its benchmark refinancing rate to a whole point.
It also said it would lower the deposit rate _ the interest it pays to banks that deposit their money at the ECB _ from a half-point below the refinancing rate to a
whole point below it. The bank’s main refinancing rate is currently at 2.5 percent. The changes would take effect Jan. 21 after the ECB’s next meeting Jan. 15, when the
refinancing rate could change, Associated Press reported.
In other currencies, the British pound was slightly higher at $1.5078 Friday from $1.5070, while the dollar was lower against the Japanese yen at 88.76 from 89.42 yen late Thursday in New York.