Treasury - Daily Forex for day 27.06.2006

The euro zone common currency firmed against the dollar on Monday due to hawkish comments from European Central Bank representatives and expectations that other countries might switch some dollar reserves into euros. ECB officials pointed to higher inflation risks and prospects for the stronger growth in the euro zone, which led some investors to speculations that the bank could raise interest rates earlier than at its regular meeting on Aug. 31. Furtermore, the central bank governor of the United Arab Emirates said that the bank plans to exchange 10% of its $23 billion currency reserves into euros.

The Czech currency rebounded from an earlier fall to 28.54 to the euro to close yesterday's trade almost unchanged. The three centre-right parties signed a coalition agreement, but the leftist Social Democrats said that at this point they would not support them in the parliamentary vote of confidence.