Dollar slips against euro in Asia on speculation European Central Bank to raise rates

The euro rose slightly against the dollar Wednesday in Asia on growing speculation the European Central Bank will raise rates soon, with some traders forecasting it will climb to a fresh record high.

The euro was around US$1.5995 Wednesday afternoon in Tokyo, higher than US$1.5916 in late New York trading on Tuesday. The euro rose as high as US$1.6018 overnight, crossing the US$1.60 barrier for the first time.

"It appears that ECB officials are seriously concerned about inflation risks in the euro-zone, which has encouraged investors to buy euros on the belief that the central bank might raise interest rates soon," said Tsutomu Soma, a senior trader at Okasan Securities.

"The euro-zone economy, in addition, remains healthy, compared with that in the U.S.," he said. "There are few reasons for players to buy the dollar instead of the euro for now."

On Tuesday, Bank of France Gov. Christian Noyer _ also a member of the ECB governing council _ indicated that the ECB is prepared to raise interest rates to push inflation lower. Inflation in the euro-zone was 3.6 percent in March.

Noyer later said his remarks had been over-interpreted, after his comment led to euro buying.

Some analysts said buying euros now might be risky, considering that finance heads of the Group of Seven industrialized nations indicated at their meeting earlier this month that they weren't happy about the steep rise in the euro. Their statement said there have been "sharp fluctuations in major currencies" recently, although they did not outline any steps they might take.

The U.S. unit also fell against the yen Wednesday as Japanese exporters sold the currency to take advantage of its recent recovery versus the domestic denomination. The dollar was trading at 103.01 yen in the afternoon, down from 103.09 yen in New York.

Against the Australian dollar, the U.S. unit plunged to 24-year lows after data from the central bank showed consumer prices in Australia surged more than expected in the first quarter. The pricing report from the Reserve Bank of Australia raised speculation that the country's benchmark interest rate _ already at a 12-year high _ may be raised again.

The Australian dollar was at 95.06 U.S. cents Wednesday afternoon.

The dollar was mixed versus other Asian currencies. It rose slightly to 41.94 Philippine pesos and fell to 1.3473 Singapore dollars.