Europe’s economy is “subject to particularly high uncertainty and intensified downside risk,” ECB President Jean-Claude Trichet said at a news conference. He said the bank’s governors had left its benchmark refinancing rate unchanged.
At 11:45 a.m. EST in New York, the Euro fell to $1.3969 after touching a two-month low of $1.3945 earlier. That’s down from $1.4093 late Wednesday.
The ECB raised its benchmark rate twice since April to stave off rising prices. The euro’s value decreased this summer because of the possibility that an indebted European nation might default on its debt.
Higher interest rates can also stymie economic growth by increasing borrowing costs and slowing the flow of credit to consumers and companies. The European economy grew at a sluggish 0.2 percent rate in the second quarter. Further rate increases might risk tipping it back into recession. Lower interest rates tend to hurt a currency’s value.
In other trading, the dollar rose to 77.4 Japanese yen, from 77.25 late Wednesday. However, the British pound rose to $1.6031 from $1.5980.
The dollar rose 0.6 percent against an index of six major currencies, reaching its highest point since late May. The dollar has risen 4 percent since the beginning of May by that measure. Investors sought safety during a broad stock market sell-off triggered by worries about a slowdown in global growth and a deepening European debt crisis.
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