The euro rose against the dollar after German consumer prices climbed more than what forecasts estimated in March, limiting the European Central Bank's scope for cutting interest rates. The inflation rate in Europe's largest economy accelerated to 3.3 percent, matching a 12-year high, faster than Germany's government estimated on March 28. ECB governing council member Juergen Stark said yesterday in a speech in Brussels he 'cannot be sure' if the 4 percent benchmark rate is high enough. 'As long as there are inflation concerns, the ECB won't be able to lower rates,' said Masashi Kurabe, head of the foreign- exchange sales & trading group at Bank of Tokyo-Mitsubishi UFJ Ltd. in Hong Kong, Japan's second-largest bank by assets. 'The euro will remain firm.'

The euro zone's top official said yesterday that the strength of the currency had not yet hit the pain threshold for exporters. Luxembourg Prime Minister Jean-Claude Juncker did not see the strong euro hurting the European economy 'for the time being'. The euro reached a record high of $1.5912 on Thursday, making German cars and French wines more expensive in the U.S. The high exchange rate eased euro-zone inflation by reducing the cost of the dollar-priced oil imports. Mr. Juncker , who leads monthly talks between the 15 euro nations, refused to say what level would hurt, but said 'We are not stepping away from it. For the time being we don't have a too huge impact on the real economy. The export sector is developing quite well. The moment will come where the exchange rate level will start to cause serious harm'. Yesterday's record quarterly sales figures from Europe's biggest car manufacturers, Volkswagen AG, would appear to back him up. The euro rose to $1.5836 against the dollar as of 7:27 a.m. GMT from $1.5790 in New York yesterday. The currency also was at 160.87 yen from 160.78. Traders believe Europe's single currency may rise to $1.64 against the dollar this quarter.

The Greenback strengthened yesterday across the board, briefly hitting a seven-week high against the pound following a raft of robust data from the United States. The dollar rose on news that a 1.1 percent rise in the U.S. Producer Price Index for March following February's 0.3 percent increase, and an unexpected rebound in the New York Federal Reserve Bank's Empire State business conditions Index to 0.6 from -22.2. Further support came shortly after from the Treasury Department's report that net monthly purchases by overseas investors of U.S. securities totaled $72.5 billion in February, nearly reversing the decline seen in January. Data to look out for today, If the U.S. consumer price index and the housing starts come in stronger than expected, this could add more support to the dollar by suppressing expectations for further aggressive cuts in interest rates from the Federal Reserve.

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