Dollar gains vs. euro after ECB moves

AP News
Posted: Jul 05, 2012 4:17 PM
Dollar gains vs. euro after ECB moves

The dollar rose versus the euro on Thursday after the European Central Bank cut a key lending rate and the bank's president warned that Europe's economic recovery would be gradual.

The European Central Bank reduced its main interest rate by a quarter percentage point to 0.75 percent. The widely expected move was aimed at boosting Europe's economy by making borrowing cheaper.

The bank didn't offer a long-term refinancing option for banks, as it had done twice in the past. ECB President Mario Draghi noted the economic pressures being felt by the 17 euro countries, nearly half of which are in recession. He also said the euro zone's economy would recover only gradually.

The euro fell to $1.2388, down almost 1.2 percent from $1.2535 on Wednesday.

The British pound also fell against the dollar, slipping to $1.5524 from $1.5597 on Wednesday. The pound's weakness came after the Bank of England decided to purchase another 50 billion pounds in government bonds from financial institutions. The hope is that the banks will use the money to make loans to businesses and households.

The dollar fell slightly against the Japanese currency, to 79.90 yen compared with 79.85 yen on Wednesday.

The dollar rose against the Canadian dollar, to $1.0134, from $1.0129. The dollar fell to 0.9717 Australian dollars, from 0.9728.