Battered euro hits lowest since 2016 vs sterling

London

THE euro slid to its lowest level in almost 6 years against Britain's pound and was pinned near 21-month lows versus the US dollar on Thursday (Mar 3), as a fresh surge in energy prices heightened worries about the euro area economic outlook.

With Brent crude hitting a 9-year high above US$119 per barrel, a dash for resources bolstered commodity-linked currencies. Australia's dollar briefly touched its highest since November.

But it was the euro that took the spotlight as it fell to 82.76 pence in London trade. That was the lowest level against sterling since July 2016. The single currency was down 0.3 per cent at US$1.1086, holding near Wednesday's low of US$1.1058, its lowest since May 2020. It is down 1.6 per cent so far this week and is heading for a fourth consecutive weekly loss against the US dollar.

Euro zone inflation hit a record high of 5.8 per cent last month, data on Wednesday showed. The problem for the European Central Bank, which meets next week, is that while the war in Ukraine is likely to boost inflation further, it is a negative for both growth and inflation in the longer term.

The Australian dollar rose to its highest since mid-November at US$0.7323 as prices for Australian exports such as coal, gas and grains soar on signs that sanctions against Russia are severely disrupting global supplies. But it drifted lower as the session wore on and was last at US$0.7298, just marginally higher on the day.

The US dollar appeared well-supported after Federal Reserve Chair Jerome Powell said on Wednesday the central bank would begin "carefully" raising interest rates this month, but was ready to move more aggressively if needed.

The dollar index was up 0.2 per cent and the dollar itself was 0.2 per cent firmer at 115.74 yen, while sterling slipped 0.3 per cent to US$1.3364.

Canada's dollar, meanwhile touched a 5-week high of C$1.25870 per dollar, a day after the Bank of Canada's first interest rate hike since 2018.

Elsewhere, the Russian rouble slid to a fresh record low at around 118.35 in Moscow trade after ratings agencies Fitch and Moody's downgraded Russia to "junk" status, citing the impact of Western sanctions. REUTERS