The single currency rose on Wednesday, reaching its 4-month peak and its highest level against the U.S. dollar. The strong demand for the euro was driven by the events in Germany, where the Constitutional Court gave its assent the country to take its part of its subsidies for financially distressed Eurozone countries.
The euro rose to 1.2899 against the dollar, and reached a daily peak at 1.2936 – the highest value since May 10.
With its long-awaited decision, Germany’s highest court rejected the claims to block the ratification of the European stabilizing mechanism, which is the permanent bailout fund of the Euro, with a capacity of 500 billion euros. According to the decision, Germany’s participation did not contradict to the constitution, but of course, this will happen under some certain conditions. Most important is that the maximum financial aid, which the country may grant to be in amount of no more than 190 billion euros, and if it needs to increase the amount, a parliamentary approval should be sought.
The single currency rose against its other competitors, reaching to 100.41 against the yen and 0.8007 against the pound.
Late last night, it began a two-day meeting of the Federal Reserve, on which the institution is expected to vote on further measures to stimulate the U.S. economy. Many investors believe that the Fed will launch a major new program of buying bonds, which is considered to be equivalent to money printing and have a negative impact on the value of the national currency. Today, the Central Bank will announce its decision on the plans for further action.
Concerning the other major currencies – the British pound rose to 1.6105 against the dollar, while the yen reported a slight decline to about 77.84 for U.S. dollar.